DTN Livestock Midday: Firm Pressure Sweeps Through Feeder Cattle

Strong triple-digit losses are seen in nearby feeder cattle futures. This is putting additional pressure on live cattle markets, although losses continue to be minimal at this point. Hog futures have firmed Tuesday.

GENERAL COMMENTS:

Livestock futures remain mixed at midday as cattle trade has eroded through the morning despite light support developing across lean hog futures. Trade volume is expected to remain limited through the rest of the afternoon with many traders willing to watch to see what develops in outside markets as well as fundamental market moves later in the week.

Corn prices are higher in light trade following the USDA monthly stocks report released Tuesday. July corn futures are 9 cents higher. Stock markets are higher in light trade. The Dow Jones is 20 points higher while Nasdaq is up 46 points.

LIVE CATTLE:

Early support that attempted to trickle into the live cattle futures complex Tuesday morning has slowly eroded following strong triple digit losses in feeder cattle trade. The lack of strong support in beef values and lackluster direction in the cash complex has added to the market uncertainty.

Even though losses have been well contained as prices are 7 to 27 cents lower in nearby contracts and 35 to 50 cents lower in deferred contracts, the lack of buyer activity could quickly create some longer term concerns through the entire complex.

Cash cattle markets are inactive Tuesday morning with just a few scattered bids and asking prices seen through the day. The asking prices that have developed have been seen at $117 to $118 live basis in the South with Northern asking prices still unavailable.

A few scattered bids have developed in the North at $180 per cwt dressed basis. It is expected that trade will hold off until later in the week, with potential active trade not seen until Thursday or Friday.

Boxed Beef cut-outs at midday are higher, $0.90 higher (select) and up $0.08 per cwt (choice) with light movement of 69 total loads reported (30 loads of choice cuts, 14 loads of select cuts, 6 loads of trimmings, 19 loads of ground beef).

FEEDER CATTLE:

Triple-digit losses have redeveloped in nearby feeder cattle futures. Even though there still remains underlying support for intermediate- and longer-term buyer activity to develop, the combination of pressure over the last two trading sessions has pushed nearby contracts more than $2 per cwt lower.

This market shift is being offset by very limited trade activity seen through the market early in the week, and is likely to be viewed as an inaccurate market test. But the lower prices are getting the attention of traders, and the inability to quickly change direction over the next couple of days may spark some additional market shifts through the entire complex.

LEAN HOGS:

Strong buyer support has moved into nearby lean hog futures as traders cover short positions seen following the losses that developed Monday. But trade volume still remains sluggish with renewed buyer support seemingly comfortable with current positions, while most of the 2019 contracts are searching for longer term direction. July futures are leading the market higher with a $1.27-per-cwt rally.

This has now pushed June and July futures above $80 per cwt with increased support developing following recent gains in cash markets and firm underlying support in pork values.

Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.83 at $78.73 per cwt with the range from $72.00 to $81.00 on 6,309 head reported sold.

Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up $1.52 at $77.09 per cwt with the range from $72.00 to $81.00 on 2,634 head reported sold.

The National Pork Plant Report posted 193 loads selling with carcass values falling $0.21 per cwt. Lean hog index for 6/08 is at $75.79 up 1.22 with a projected two-day index of $77.18, up 1.39.

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