Limited losses have developed Monday morning as traders seem to have a much more subdued temperament than they did last week. Early cattle losses have eased, allowing for limited price support to trickle into nearby trade.
Cattle futures have stabilized Monday morning with nearby live cattle contracts trading on either side of unchanged. The sharp losses that developed Friday have put long-term lows within sight, but limited selling Monday morning is actively defending these price levels. Hog futures are mixed in a wide range as most contracts are trading firmly higher, with the exception of December through April futures, which have redeveloped sharp losses.
Corn futures are higher in light morning trade. December corn futures are 3/4 cent higher. Stock markets are lower in light trade with the Dow down 21 points and the NASDAQ down 48 points.
Limited gains have trickled into live cattle futures midday Monday following firm initial trade, which tested long-term support levels. October contracts are 12 cents higher at $195 per cwt, while the October 2016 number of $94.45 per cwt remains the magic number in order to sustain current support levels.
The expectation that additional buyer support will become more evident in early 2020 contract months as cattle supplies slow should help to spark some activity through the complex over the near future.
Cash cattle markets remain quiet Monday morning with bids and asking prices undeveloped following showlist distribution and inventory-taking Monday. It is likely that trade volume will be delayed until the second half of the week.
Boxed beef cutouts at midday are mixed, up $1.74 (select) to down $0.73 (choice) with light movement of 34 total loads reported (17 loads of choice cuts, 8 loads of select cuts, 6 loads of trimmings, 4 loads of ground beef).
Firm pressure continues to hold in feeder cattle trade as steady-but-firm pressure is holding through the complex. Unlike live cattle futures, feeder cattle futures still well entrenched within the current sideways trading range seen over the last month. This may help to spark some additional stability, although the tone of the market still remains generally weak.
October futures have posted triple-digit losses Monday morning, eroding below $130 per cwt based on spillover pressure from live cattle markets and general fundamental weakness.
December through April lean hog futures have eroded through the morning with triple-digit losses in December and February contracts based on concerns of further fundamental pressure surrounding expansion of export markets into China.
Despite the announcement that African swine fever has been confirmed in the Philippines, markets continue to focus on limited underlying support as most traders eye the availability to get access to the Chinese market. The long-term focus on China has and will continue to be as self-sufficient as possible in the pork market, which creates long-term questions of market access even with a trade agreement.
Continued strong domestic pork production is putting the most pressure on December futures, although at this point, the available expanded trading limits do not appear to be needed.
Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.28 at $50.83 per cwt with the range from $47 to $51 on 5,876 head reported sold.
Pork values weakened following additional softness in picnic and rib cuts. Pork cutouts fell $0.77 per cwt at $72.55 per cwt with 131 loads traded. Lean hog index for 9/5 is $64.69, down $0.56, with a projected two-day index is $63.75, down $0.93.