DTN Livestock Midday: Sharp Losses Develop Across Futures

Livestock futures posted triple-digit losses as nearby contracts broke through short-term support levels. Additional liquidation is expected through the end of the week.

General Comments

Sharp losses developed in all livestock trade Friday morning with nearby lean hog futures posting limit losses of $3 per cwt. Late-morning buying developed, with live cattle futures currently mixed as traders cover short positions in front of the weekend break, and afternoon cattle on feed report.

Corn futures are lower in light trade. July corn futures are 1 cent lower. Stock markets are mixed in light trade. Dow Jones is 40 points higher with NASDAQ down 17 points.

LIVE CATTLE:

Sharp losses Friday morning created additional market pressure through the entire complex, allowing nearby contracts to break through support levels during morning trade. Limited follow-through selling late Friday has sparked short covering in deferred contracts. This may add increased underlying stability through the end of the week with traders trying to adjust positions following sharp market swings during the last couple of weeks.

Market closes at current price levels would hold prices above short-term support levels and maintain the sideways trading range seen over the last couple of months. Traders are also starting to adjust to the upcoming cattle on feed report. With light to moderate cattle on feed increases expected, markets are not expected to show significant market shifts.

Cash cattle interest remains sluggish with limited bids redeveloping at the lower end of range Thursday. Live bids of $109 to $110 live are seen and $178 dressed. It is uncertain if additional trade will develop before the weekend. If trade does develop, feeders may wait until after the cattle on feed report before pulling the trigger on extra cattle sales for the week, otherwise holding off until next week before selling into this lower market trend.

Boxed Beef cut-outs at midday are lower, $0.46 lower (select) and down $0.72 per cwt (choice) with light movement of 52 total loads reported (18 loads of choice cuts, 16 loads of select cuts, 7 loads of trimmings, 11 loads of ground beef).

FEEDER CATTLE:

Follow-through pressure continues to develop in feeder cattle trade. This may add increased underlying weakness through the end of the week. Although prices remain lower Friday, markets have pulled off session lows with August futures now holding narrow losses.

Pre-report adjustments are developing midmorning Friday as traders are focusing on reduced cattle placements in May, compared to year-ago levels. Grain trade has stabilized, but this is still leaving concern about overall production costs and feed supply levels through the next year.

LEAN HOGS:

Limit losses have developed across nearby lean hog trade following active selling over the last two trading sessions. The most recent pressure has broken through short-term support levels established last week, with futures trading at three-month lows. There is expected to be some additional underlying pressure as traders search for technical support through the end of June.

Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.64 at $74.08 per cwt with the range from $66 to $76 on 5,191 head reported sold.

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

Pork values shifted lower following firm pressure in most primal cuts. Pork cutouts fell $0.36 per cwt at $75.84 per cwt with 142 loads traded. Lean hog index for 6/19 is $79.55, up 0.06, with a projected two-day index is $79.14, down 0.41.

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