Early morning market stability seen through the
livestock complex has quickly eroded with triple-digit losses developing
in feeder cattle and lean hog trade. Concern surrounding export trade
of pork is being met with increased grain prices based on crop size
uncertainty. Corn futures are higher in moderate trade. July corn
futures are 7 1/2 cents higher. Stock markets are higher in light trade.
Dow Jones is 140 points higher with Nasdaq up 83 points.
LIVE CATTLE:
Initial mixed trade in live cattle futures has
quickly turned lower with traders focusing on triple-digit losses
redeveloping in feeder cattle futures. The focus on increased feed costs
and uncertainty about overall feed supplies at the end of the year is
causing concern through the entire livestock market based on production
cost uncertainty. If feed prices remain uncontracted, it is going to
remain extremely difficult to estimate and manage overall cost of gains
for cattle in feedlots as well as estimating break-even prices for
feeder cattle. This will likely create additional market pressure over
the near future with overall crop size uncertainty likely to be a major
topic through the entire year. Cash cattle markets are quiet with bids
and asking prices undeveloped at this point. It is expected to be
midweek or later before any significant interest or sales are seen.
Boxed Beef cut-outs at midday are lower, $1.08 lower (select) and down
$0.33 per cwt (choice) with light movement of 62 total loads reported
(31 loads of choice cuts, 16 loads of select cuts, 6 loads of trimmings,
9 loads of ground beef).
FEEDER CATTLE:
Strong pressure has moved into feeder cattle
trade midmorning as increased focus on feed costs is eroding futures
trade. Cash markets are expected to be directly impacted by higher corn
prices. The Oklahoma City feeder cattle market is expected to show cash
market pressure, which would likely add increased softness through the
end of the week. August futures are trading $2.15 per cwt lower midday
with the potential for lack of firm support in live cattle trade and
continued corn gains to retest contract lows before the end of the week.
LEAN HOGS:
Active pressure is developing in nearby lean hog
trade following general market apathy through most of the market. June
through August futures are holding triple-digit losses based on general
market softness as traders seem to be once again focusing on the
inability to gain access to the China pork market. Although the focus on
increased global demand continues to keep markets generally supported,
recent news stories focusing on the tighter supplies of pork pushing
world prices is causing some nervousness that the increased price levels
will affect domestic demand. The strong domestic demand seen through
early 2019 is critical in additional support of the entire hog complex.
Cash prices are lower on the National Direct morning cash hog report.
The weighted average price is down $0.28 at $81.18 per cwt with the
range from $72.00 to $83.00 on 4,872 head reported sold. Cash prices are
higher on the Iowa/Minnesota Direct morning cash hog report. The
weighted average price is up $0.60 at $82.50 per cwt with the range from
$72.00 to $83.00 on 1,891 head reported sold. Pork values trickled
higher with a widely mixed range seen in primal cuts. Pork cutouts added
$0.32 per cwt at $86.85 per cwt with 185 loads traded. Lean hog index
for 5/17 is $84.59, unchanged, with a projected two-day index at $84.37,
down 0.22.
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