GENERAL COMMENTS:
For the week ended 8/16/19: From Friday to
Friday livestock futures scored the following changes: Aug LC off $8.13,
Oct LC off $8.70; Aug FC off $4.33, Sep FC off $6.07; Oct LH off $4.97,
Dec LH off $3.90.
Late-day activity turned bearish in all
livestock futures with limit losses in spot lean hog contracts setting
the tone. The inability of cattle futures to hang onto early support
adds to underlying concerns that traders may expect additional weakness
through the next few days. Corn futures rallied higher following the
final news story from the DTN\Progressive Farmer Digital Yield Tour and
concerns that additional production problems will be reported over the
next week. September corn futures are 10 1/4 cents higher. Stock markets
are higher in light trade. Dow Jones is 308 points higher with NASDAQ
up 129 points. Cash cattle trade appears essentially done for the week
with limited sales of live cattle in Nebraska at $106 per cwt. This is
generally $7 per cwt lower than last week's levels, and continues to
confirm the weaker market trend. Most cattle still on showlists will
likely be relisted next week as both sides do not appear to be in any
hurry to trade. National Daily Direct afternoon hog report is $0.49
lower with a weighted average of $69.65 per cwt. Full range of $59 to
$74 per cwt on 9,786 head sold.
LIVE CATTLE: Continued weakness puts additional
pressure on cattle futures ($0.27 lower to $0.82 lower). Moderate losses
continue to develop in all live cattle trade late Friday. Despite firm
market support moving into the complex the first half of the session,
underlying weakness pushed prices lower at closing bell. August and
October futures are both trading below $100 per cwt with traders
searching for longer-term support, but so far unable to find any. This
may add increased weakness early Monday as traders focus on technical
pressure, which continues to develop. Beef cut-outs: higher, $2.59
higher (select, $213.26) and up $2.57 (choice, $238.69) with good demand
and light offerings, 100 loads (55 loads of choice cuts, 16 loads of
select cuts, 10 loads of trimmings, 19 loads of coarse grinds).
MONDAY'S CASH CATTLE CALL: Lower. Cash cattle
activity Monday is expected to remain undeveloped with showlist
distribution and inventory taking the focus. The bearish tone in futures
trade will continue to soften the market, although packer resolve may
start to improve given higher beef values and cattle distribution to
other plants becoming more routine following last week's fire in Garden
City, Kansas.
FEEDER CATTLE: Active late-week pressure sparked
additional weakness ($0.65 lower to $1.20 lower). Triple-digit losses
backed away from midweek gains with August contracts holding a $1.20 per
cwt loss. The bearish tone across the entire livestock market continues
as concerns grow about beef demand over the coming months and potential
moves in grain trade. Given the sharp losses in corn following Monday's
USDA estimated production numbers, buying is starting to move back into
the complex based on expectations that lower production will be
reported over the next few days or weeks. CME cash feeder index for 8/15
is $137.60, down 1.55.
LEAN HOGS: Sharp late-day losses added increased
bearishness to the entire complex ($0.42 to $3 lower). A combination of
technical and fundamental pressure unfolded late Friday, breaking away
from early support and moving spot lean hog futures to limit losses of
$3 per cwt. Not only does this create potential widespread liquidation,
sparking additional technical shifts lower, but the limit losses will
expand trading limits Monday to $4.50 per cwt. The volatility in
potential demand for pork in domestic and export markets is being paired
with the bearish moves in cattle futures during the week. Pork cutout
values posted sharp losses. Pork cutout values fell $1.97 per cwt,
moving to $86.26 per cwt on 352 loads. CME cash lean index for 8/14 is
$79.34, down 0.52. DTN Projected lean index for 8/15 is $79.02, down
0.32.
MONDAY'S CASH HOG CALL: Steady to $2 lower.
Sharp futures losses Friday are expected to put cash trade on the
defense once again. This may allow for firm pressure with most bids
expected to be $1 to $1.50 per cwt lower. Monday slaughter numbers are
expected at 474,000 head.
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