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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