DTN Livestock Midday: Cattle Futures Continue Sharp Losses

August through December live cattle futures have moved back to limit losses midday Tuesday. This continues to add increased weakness through the entire complex as more traders enter the market.

General Comments

Live cattle futures move back to limit losses in nearby contracts following a second wave of market liquidation through the morning. This pressure has caused increased pressure in both live cattle and feeder cattle trade. Corn futures lower as traders continue to take into account Monday’s bearish report.

September corn futures are 17 cents lower. Stock markets are higher in light trade. Dow Jones is 400 points higher with NASDAQ up 148 points.

LIVE CATTLE:

Renewed pressure is developing midday Tuesday with increased underlying pressure sweeping through the entire complex. April through December futures are locked in extended limit losses of $4.50 per cwt as an attempt to rebuild buyer interest through the morning has been squashed. Nearby live cattle trade remains at contract lows with October futures falling below $100 per cwt.

This continues to add increased volatility into the market, although the contracts with the largest open interest are unable to trade due to trading limits. A close at these levels will allow for another round of extended trading limits as traders try to grasp the uncertainty of packing plant production over the coming weeks and months.

Cash cattle activity remains silent with bids and asking prices still undeveloped. Given the bearish moves in futures trade over the last two days, it is likely that both sides will wait for some sense of market stability before even posting bids or asking prices. Some limited interest may be seen Wednesday, but most trade is expected to be delayed until late in the week.

The $5.45-per-cwt rally in choice cutouts in the morning report is getting some attention, helping to spark an even wider gap between live and beef values.

Boxed Beef cut-outs at midday are higher, $2.43 higher (select) and up $5.45 (choice) with light movement of 96 total loads reported (43 loads of choice cuts, 24 loads of select cuts, 17 loads of trimmings, 12 loads of ground beef).

FEEDER CATTLE:

Early mixed trade filtered into feeder cattle Tuesday morning as deferred futures broke away from the sharp losses in live cattle trade and focused on the 40-cent loss in corn prices over the last 24 hours. The gains etched out in deferred contracts were unable to hold as increased bearishness moved into all cattle trade with nearby contracts trading $5 to $6 per cwt lower, but have yet to reach expanded trading limits of $6.75 per cwt.

LEAN HOGS:

Mixed trade is seen across lean hog trade once again Tuesday as early support has eroded as increased bearishness has moved into cattle futures. Limited fundamental moves are seen through the complex as outside market shifts in cattle and corn markets seem to be limiting the upside market potential of lean hog trade.

October futures are holding triple-digit losses, while the remainder of contracts are stuck within a narrowly mixed trading range.

Cash prices lower on the National Direct morning cash hog report. The weighted average price is down $0.53 at $68.22 per cwt with the range from $58.52 to $72.50 on 5,181 head reported sold.

Pork values slipped lower following mixed shifts in primals. Pork cutouts fell $0.64 per cwt at $89.55 per cwt with 224 loads traded. Lean hog index for 8/9 is $81.75, down 0.58, with a projected two-day index is $80.95, down 0.80.

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