Active liquidation quickly flooded through the entire livestock complex Wednesday with lean hog and feeder cattle futures down by triple digits at midday. Lean hog futures are flirting with limit losses once again as October through April contracts are down $2.55 per cwt or more. General weakness in live cattle trade is leading to increased weakness at the end of the month. Corn futures are lower in light trade with September down 6 cents. Stock markets are higher in light trade with the Dow Jones 14 points higher and the NASDAQ up 14 points.
LIVE CATTLE:
Follow-through pressure is slowly but steadily moving into live cattle trade on the last trading day of July. Most pressure is seen in December and February futures contracts, with each holding triple-digit losses at midday. The aggressive losses in hog futures have quickly sparked concern throughout the livestock trade, as the moves lower could signify a much more aggressive selling trend in early August. This may spark some stability over the next couple of weeks, but buyers are unwilling to move into the bearish market structure given the active liquidation seen over the last couple of days. Cash cattle bids are slowly starting to improve with live bids of $110 and dressed bids ranging from $179 to $185 per cwt. Light trade has been reported by a regional packer at $185 per cwt, steady with limited trade seen Tuesday. Asking prices remain at $114 live and $186 and higher dressed, but strong futures pressure is likely to limit improvement in bids through the rest of the day. Most trade is likely to be pushed off until Thursday or Friday as traders look for early month price stability. Boxed beef cutouts at midday are lower, down $0.91 (select) to down $0.33 per cwt (choice) with light movement of 95 total loads reported (35 loads of choice cuts, 27 loads of select cuts, 11 loads of trimmings, 21 loads of ground beef).
FEEDER CATTLE:
Active pressure is seen across all feeder cattle contracts with traders quickly offsetting earlier gains seen Tuesday. Although additional strong pressure is seen in the grain trade, traders quickly shifted gears from focusing on lower production costs to the pressure developing in all other livestock trade. The recent pressure still has not damaged the recent market support, as prices remain near short-term highs at the end of the month.
LEAN HOGS:
Lean hog futures quickly tumbled lower Wednesday morning as unrestricted liquidation is nearing limit losses once again midday. This overall lack of buyer activity at the end of the month has further eroded prices with traders looking for any sense of stability. It appears that nearby contracts will test limit losses before the end of the session. If prices close out July at these levels, increased pressure is likely to be seen through the rest of the week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is $3.18 lower at $79.30 per cwt with the range from $75 to $82 on 3,233 head reported sold. Pork values shifted lower despite mixed price shifts in primal cuts. Pork cutouts fell $0.57 per cwt at $86.52 per cwt with 136 loads traded. Lean hog index for 7/29 is $82.10, up $1.74, with a projected two-day index is $83.41, up $1.31.
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