Pressure in most commodity markets Wednesday has brought renewed uncertainty and concern to the cattle complex Tuesday. This has pushed live cattle and feeder cattle futures to triple-digit losses.
Sharp losses continue to be seen through cattle trade with prices $2 to $2.70 per cwt lower in live cattle futures, and $3 to $4 per cwt lower in feeder cattle trade. If nearby live cattle futures move to limit losses of $3 per cwt, the overall concern in the complex may add widespread liquidation through the end of the week.
Corn prices are lower in light trade Wednesday. July corn futures are 7 cents lower. Stock markets are lower in light trade. The Dow Jones is 142 points lower while Nasdaq is down 44 points.
Triple-digit losses have continued to hold at midday with August futures leading the complex lower with a $2.63-per-cwt loss at midday. All contracts are holding triple-digit losses Wednesday as widespread concern in both beef markets as well as most other commodity trade waits to hear the potential backlash from the Chinese government following the announcement that additional products have been added to the tariff list by the U.S. administration.
The main concern in the market goes beyond tariffs, as China does not have enough exports to continue to match tariffs. The concern is that the government will change the way American companies do business in China, and other “non-tariff” actions, that may have an even longer impact to the economy.
Cash cattle markets are starting to see some defensiveness following the sharp losses in futures trade. Bids are developing at $108 live basis, with a few cattle traded in the north at $175 per cwt dressed basis. This is not expected to set the trend at this point, but the general pressure in all commodities is likely to keep both sides cautious.
The preliminary report from the Fed Cattle Exchange Auction today listed a total of 365 head all for Kansas, zero actually sold, 365 head were unsold, zero head listed as PO. All cattle listed were set for 1-9-day delivery.
Boxed Beef cut-outs at midday are mixed, $1.08 lower (select) and up $0.66 per cwt (choice) with moderate movement of 88 total loads reported (39 loads of choice cuts, 16 loads of select cuts, 14 loads of trimmings, 19 loads of ground beef).
Widespread losses have continued to expand through the complex Wednesday morning. This is pushing prices $3 to $4 per cwt lower at midday as widespread concerns that the latest round of tariffs to be imposed on China will create much more significant restrictions when China retaliates in kind.
As of now, it is uncertain what the long-term direction will be, but given the nervousness seen, traders are becoming very defensive. This pressure is likely to continue through the next few days, due to the widespread pressure in most commodity and financial markets.
Nearby lean hog futures remain mixed in a narrow trading range with front-month July futures holding a 27 cent gain. August through December contracts remain 50 to 80 cents per cwt lower with increased pressure coming from the sharply lower cattle trade and weakness in nearly all other commodity markets.
Deferred lean hog trade has held losses of $1 to $1.40 per cwt with the overall lack of support in the complex focusing on longer-term market softness, and concerns that increased demand pressure will develop through 2019.
Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.69 at $75.49 per cwt with the range from $68.00 to $76.25 on 5,200 head reported sold.
Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $1.73 at $74.54 per cwt with the range from $74.00 to $76.00 on 1,570 head reported sold.
The National Pork Plant Report posted 209 loads selling with carcass values falling $0.09 per cwt. Lean hog index for 7/9 is at $81.67 down 0.25 with a projected two-day index of $81.52, down 0.15.