Friday, August 2, 2019

Friday Closing Livestock Market Summary - Livestock Losses Continue

GENERAL COMMENTS:
Losses continued across all livestock futures markets Friday with triple-digit losses seen in cattle and hog markets late in the day. Growing concerns about trade with China led to weakness in lean hog futures, while a rebound in corn futures added to the already bearish tone in feeder cattle trade through the end of the week. From Friday to Friday, livestock futures scored the following changes: Aug live cattle, off $1.00; Oct live cattle, off $2.08; Aug feeder cattle, off $4.10; Sep feeder cattle, off $5.88; Aug lean hogs, off $10.15; and Oct lean hogs, off $13.73. Limited cash cattle sales continued to develop Friday, while prices were generally steady with trade earlier in the week. Southern cash cattle trade was reported at $111 per cwt, steady with early week trade, but $1 per cwt lower than last week. Live trade in the North had developed in Nebraska and Colorado by midafternoon Friday at $114.50 per cwt. This is generally steady with last week's price levels. Bids of $182 to $183 per cwt dressed basis in the North were still on the table, but it was uncertain if additional trade would be seen before the end of the week. The National Daily Direct afternoon hog report was $0.76 lower ($68 to $84.50, weighted average $77.20) on 8,060 head sold. Corn futures were higher in light trade with September up 6 3/4 cents. Stock markets were lower in light trade with the Dow down 173 points and the NASDAQ down 123 points.

LIVE CATTLE: Live cattle futures closed $0.22 to $$1.27 lower. Widespread weakness continued in livestock trade Friday despite an early attempt by traders to stabilize prices. Technical pressure is likely to be seen again early next week as traders return from the weekend break. Concerns about increased tariffs on Chinese products and potential retaliation offset any positive news by the White House on increased beef exports going to the European Union. The market is focusing less on the actual amount of product exported at this point and more on the overall trade attitudes surrounding not only beef products, but all commodities. Beef cut-outs: higher, up $1.29 (select, $190.63) to up $0.49 (choice, $214.73) with moderate demand and offerings, 98 loads (36 loads of choice cuts, 40 loads of select cuts, 10 loads of trimmings, 13 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL: Steady. Activity Monday is expected to remain quiet with the weekly routine of showlist distribution and inventory-taking the primary activities.

FEEDER CATTLE: Feeder cattle futures closed $1.60 to $3.55 lower. Technical pressure quickly developed Friday morning following the shift lower over the last couple of days. Renewed buying in corn futures sparked another round of price protection in nearby and deferred feeder cattle trade with September through November contracts closing $3.25 to $3.55 per cwt lower. This led to increased liquidation in live cattle trade late Friday. CME cash feeder index for 7/31 is $142.23, up $0.08.

LEAN HOGS: Lean hogs closed mixed, $0.07 higher to $3.00 lower. Early buying was seen in lean hog futures as traders attempted to stabilize the recent losses. However, pressure throughout the rest of the livestock trade quickly overshadowed the ability for buyers to move back into the complex. Early triple-digit gains faltered, turning into limit losses of $3 per cwt at closing bell. The continued pressure in the complex has dashed any hope of a late-summer rally, as prices have broken through long-term support the last two sessions, leaving open the possibility of additional technical movements in the coming days. Pork values shifted lower as primal cuts have been affected by the pressure in futures and cash trade. Pork cutout values fell $1.15 per cwt, moving to $86.64 per cwt on 323 loads. CME cash lean index for 7/31 is $84.11, up $0.70. DTN Projected lean index for 8/1 is $84.64, up $0.53.


MONDAY'S CASH HOG CALL: Steady to $2 lower. Continued losses are expected early Monday with packer bids expected to slide lower due to aggressive futures market pressure and generally weak market direction. Most bids are expected to be $1 per cwt lower despite the lighter buying needed for the reduced packer capacity with three plants remaining dark Monday. Monday slaughter numbers are expected at 420,000 head.

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