DTN Livestock Midday: Hog Post Gains on Trade Hopes

Photo: United Soybean Board

Lean hog futures remain firmly higher Wednesday morning as traders place renewed hope on the expected trade talks with China next week. Cattle markets remain sluggish as pressure developed within a narrow to moderate range.

General Comments

Mixed trade continues Wednesday morning in livestock trade as futures have deviated from early narrow moves. Moderate to firm support has slowly moved into lean hog trade based on hopes and expectations of renewed trade talks next week between the U.S. and China. Cattle markets have eroded on previous fundamental softness, while lower corn prices have had a minimal impact on feeder cattle trade Wednesday morning.

Corn futures are lower in moderate trade. July corn futures are 8 cents lower. Stock markets are mixed in light trade. Dow Jones is 13 points higher with NASDAQ down 4 points.

LIVE CATTLE:

Firm late-morning pressure is seen in live cattle trade with futures holding 20 to 50 cent losses at midday. The softness in grain trade is limiting overall market activity, but pressure quickly developed, based on concerns that beef values may continue to erode through the week. Even though June futures remain lightly traded, the softness in spot trade is creating spillover weakness in most contracts.

Traders are also taking advantage of limited volume, in order to square positions following moderate gains seen early in the week. Live cattle futures continue to remain stuck within a $5 per cwt trading range. There seems little interest or outside market influences developing which would spark a wide move in live cattle futures in order to break prices out of the current market range.

Cash cattle bids have redeveloped through the morning at $109 live and $81 per cwt dressed. Even though these bids remain well below asking prices, dressed bids have improved significantly from levels seen Tuesday. Asking prices remain firm at $112 to $115 live and $185 and higher dressed. At this point there seems very little urgency in getting deals done, which will likely push actual trade off until Wednesday or later.

Boxed Beef cut-outs at midday are higher, $1.69 higher (select) and up $1.39 per cwt (choice) with active movement of 106 total loads reported (61 loads of choice cuts, 19 loads of select cuts, 7 loads of trimmings, 18 loads of ground beef).

FEEDER CATTLE:

Narrow price shifts have developed Wednesday morning was prices have shifted higher and lower at different points through the morning. Currently prices are mixed from 40 cents lower to 45 cents higher as pressure in nearby contracts is being directed by softness in live cattle trade. The softness in grain trade and potential that traders may now have a good handle on the amount of grain production lost this year due to wet weather and late planting is helping to bring buyers back into fall and winter contract months.

Narrow trading ranges are seen nearby futures, although the recent moves is starting to slightly expand price premiums for fall contracts, which was essentially not existent over the last week.

LEAN HOGS:

Strong gains have developed Wednesday morning in nearby lean hog trade as traders continue to focus on potential support surrounding the announcement that trade talks may develop with China at the G-20 Summit next week. This is helping to bring additional short term support, based more on the hope that progress is achieved in trade talks rather than any actual developments seen. August futures are leading the complex with $1.10 per cwt gains as traders continue to move prices away from long term lows set last week.

Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.04 at $74.66 per cwt with the range from $67 to $75.14 on 2,843 head reported sold.

Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report.

Pork values slipped lower following mixed triple digit swings in most primals. Pork cutouts fell $0.80 per cwt at $80.35 per cwt with 147 loads traded. Lean hog index for 6/17 is $79.26, down 0.01, with a projected two-day index is unavailable due to delays.

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