Wednesday, March 21, 2018

Wednesday Midday Livestock Market Summary - Cattle Liquidation Continues in Live Cattle Trade

GENERAL COMMENTS: 
Live cattle futures are leading the market lower Wednesday morning as active follow-through pressure has flooded into the market. Nearby live cattle have posted triple-digit losses, bringing concern that additional widespread liquidation could quickly develop over the near future. Corn prices are lower in light trade. May corn futures are 1/4 cent lower Wednesday. Stock markets are higher in light trade. The Dow Jones is 129 points higher while Nasdaq is up 22 points.
LIVE CATTLE:
Strong follow-through pressure has developed across the entire live cattle complex. This has added triple-digit losses to nearby contracts and once again placed the entire market in a defensive tone. The lack of buyer support or even stability seen in the market midweek is opening the door for additional liquidation that could further test long term support levels. April futures continue to lead the market lower with a $1.42 per cwt loss. This is likely to add weakness to the entire complex. Cash cattle activity has remained sluggish through the morning Wednesday. A few bids have developed in the North at $124 to $126 live basis and $202 to $203 dressed basis. The light to moderate activity seen Tuesday has started the ball rolling with prices generally at $126 live and $203 to $204 dressed. Additional activity is expected to be seen through the end of the week. Asking prices are developing around $128 live basis and $205 and higher dressed. This could delay activity given the inactivity, but defensiveness in the futures trade. The Fed Cattle Exchange Auction today listed a total of 166 head, with 166 actually sold, zero head listed as unsold, and zero head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 166 total head, with 166 head sold at $125.00-$126.00, 0 head unsold, zero head listed as PO; NE -- no cattle reported; TX -- no cattle reported; CO -- no cattle reported; IA -- no cattle reported; other states (OK, SD, MN) -- no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 166 head total, 166 head sold, with a weighted average price of $125.63; 1-17 day delivery -- no cattle reported; 10-17 day delivery -- no cattle reported; 17-30 day delivery -- no cattle reported. Boxed Beef cut-outs at midday are mixed, $0.14 lower (select) and up $0.63 per cwt (choice) with light movement of 78 total loads reported (42 loads of choice cuts, 19 loads of select cuts, 5 loads of trimmings, 11 loads of ground beef).
FEEDER CATTLE:
Early gains in feeder cattle futures have been unable to hold, although the tone of the market is much more stable than any of the recent trading sessions. Strong triple-digit losses in live cattle trade Wednesday morning has quickly eroded market support and pushed most contracts lower. Prices continue to trade from 44 cents per cwt lower to 25 cents higher at midday. April futures remain the most active contract at this point, and are holding a 12 cent loss at midday.
LEAN HOGS:
Activity in the lean hog futures complex continues to be a mixed bag with prices mixed from 95 cents per cwt lower to 20 cents higher. Although most contracts are steady to 50 cents per cwt lower, the focus on follow-through market defensiveness is very evident during morning trade. Traders are not only concerned about the weakness in cash values that continue to develop, but the inability to bring additional commercial or noncommercial buying to the complex is causing prices to see even more market pressure. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.62 at $54.93 per cwt with the range from $51.00 to $56.00 on 4,535 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $1.02 at $54.48 per cwt with the range from $51.00 to $56.00 on 1,650 head reported sold. The National Pork Plant Report posted 183 loads selling with carcass values gaining $0.39 per cwt. Lean hog index for 3/19 is at $64.29, down 0.68 with a projected two-day index of $63.63, down 0.66

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