Wednesday Midday Livestock Market Update - Sharp Pressure Redevelops in Feeder Cattle Futures

GENERAL COMMENTS: 

Sharp losses in feeder cattle trade has created significant pressure across the entire livestock complex. This softness remains focusing on increased market uncertainty as all markets are holding firm losses at midday. Corn prices are lower in light trade. December corn futures are 1/4 cent per bushel higher. Stock markets are mixed in light trade. The Dow Jones is 2 points lower while Nasdaq is up 2 points.

LIVE CATTLE:

Pressure has continued to build through the complex with triple-digit losses quickly moving through deferred contract months following the lack of support in the feeder cattle market. Even though nearby live cattle futures are able to limit losses during the morning, increased pressure may spark follow-through liquidation in all contract months. Cash cattle trade has started to develop in the North with dressed deals seen at $188 in Nebraska. This may not be able to set the tone for the week, but it is expected that the pressure in futures trade will keep markets soft through the end of the week. Bids are seen at $116 to $117 live basis, which may lend to markets steady with the extremely light trade seen Tuesday. The Fed Cattle Exchange Auction today listed a total of 653 head, with 0 actually sold, 309 head listed as unsold, and 344 head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 242 total head, with 0 head sold, 92 head unsold, 150 head listed as PO ($117.25); NE 217 total head, with 0 head sold, 217 head unsold, and 0 head listed as PO; TX 194 total head, with 0 head sold, 0 head unsold, and 194 head listed as PO ($117.50); CO -- no cattle reported; IA -- no cattle reported; other states -- no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 653 head total, 0 head sold; 1-17 day delivery -- no cattle reported; 10-17 day delivery -- no cattle reported; 17-30 day delivery -- no cattle reported. Beef cut-outs at midday are lower, $1.61 lower (select) and down $0.2.26 per cwt (choice) with light movement of 81 total loads reported (42 loads of choice cuts, 25 loads of select cuts, 4 loads of trimmings, 10 loads of ground beef).

FEEDER CATTLE:

Sharp losses have flooded into the feeder cattle futures once again Wednesday morning following the aggressive triple-digit losses seen late Tuesday. The continued pressure in the market is adding even more concern that widespread selling pressure and liquidation will continue. Losses have backed away from session lows in most contracts, but still are trading $1 to $3 per cwt lower as traders try to find some sense of support through the complex.

LEAN HOGS:

Moderate to strong pressure is seen in lean hog futures trade once again Wednesday morning following the triple-digit losses Tuesday and aggressive downward market pressure in the cattle complex. Spillover weakness has quickly and uniformly spread through the hog market which is adding concerns not only about the ability to offset fundamental pressure, but could bring some technical shifts back into the market. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.16 at $59.34 per cwt with the range from $54.00 to $60.00 on 4,086 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $0.95 at $58.84 per cwt with the range from $54.00 to $59.50 on 895 head reported sold. The National Pork Plant Report posted 193 loads selling with carcass values falling $1.34 per cwt. Lean hog index for 12/04 is at $64.35 up $0.43 with a projected two-day index of $64.85, up $0.50.

Wednesday Morning Livestock Market Summary - Follow-Through Pressure Likely Early Wednesday

GENERAL COMMENTS:

Sharp losses that developed in feeder cattle trade Tuesday afternoon sparked additional spillover selling activity across the entire cattle complex. This will open the door for additional price pressure as nearby contracts have continued to break through support levels. The pressure in feeder cattle markets broke through November lows of $149.55 per cwt, sparking additional liquidation and widespread losses through most cattle contracts. Early trade is expected to focus on short-covering and a combination of widespread liquidation with traders focusing on the potential for additional strong losses. As seen through the week, initial market support in cattle trade can quickly erode due to light trade activity and depth of buyers willing to return to the market. Cash cattle markets posted sluggish trade activity following the market tumble with a handful of cattle traded in the South at $117 per cwt. There were a few cattle reported sold in Iowa at $123 per cwt late Tuesday. But there is not enough activity to develop a market trend.

Futures trade continues to weaken following the aggressive triple-digit pressure that has developed in nearby contracts. This is expected to spark additional concerns that the recent market support may erode over the near future. Even though support continues in pork values, the focus on available hogs ready for market and questions about if there is enough demand through early 2018 to clear all of these supplies, may wear on the market. Cash hog values are expected to open mixed in a narrow range from $1 per cwt lower to 50 cents higher. Daily hog runs are pegged at 465,000 head with 215,000 head seen Saturday.

	BULL SIDE		BEAR SIDE
1)	The ability to create stability in the spot month December live cattle futures is creating a little calm through the last few days with prices holding near $116.50 per cwt. This overall lack of direction in spot contracts may help to draw some commercial traders back into the market through the end of the week.	1)	Sharp losses in feeder cattle futures have set the tone for additional market liquidation. As front-month futures have broken through support levels at 149.50 per cwt, this allows feeder cattle markets to move through recent support. The next support level is expected to be the September low of $140.95.
2)	Beef values continue to shift higher during the week, bringing evidence that even with the sharply lower futures prices in the last few days, continued support remains in the market. This could help to limit follow-through liquidations as traders turn to fundamentals to help calm the volatility of the market.	2)	The underlying shift lower over the last week in futures trade has accounted for a $6 per cwt sell-off in front-month futures since late November. This is creating additional widespread weakness across the entire market and is likely to spark additional liquidation through the rest of the week.
3)	Pork values continue to see strong underlying support as the ability to move pork product even though supplies remain available is helping to stimulate buyer support in all areas of the market. This could bring additional market support over the near future.	3)	Strong market pressure developed Tuesday as traders try to focus on squaring positions following the most recent market support. The aggressive move lower in the cattle complex continues to have increased influence in all markets, allowing traders to quickly back away from previous support.
4)	Despite the recent pullback in futures trade, cash values have seen significant market support in the last couple of trading sessions. Follow-through buyer interest is expected todevelop over the near future.	4)	Traders continue to struggle to break through short-term resistance levels of $65.75 per cwt. This overall support may continue to limit additional buyer support over the next several days and bring additional volatility to the complex.

Tuesday Closing Livestock Market Summary - Feeder Cattle Futures Plummet Lower in Late-Day Trade

GENERAL COMMENTS

Cash cattle markets remain generally undeveloped, although there are a few token bids in the South at $114 to $116 per cwt, while Northern dressed bids are seen at $187 per cwt. The pressure in futures trade is making feeders nervous, although it appears most will hold out until later in the week. Asking prices are still hard to define, although a few live asking prices are seen around $121 per cwt. This may spark some midweek interest. According to the closing report, the national hog base is $0.29 higher compared with the Prior Day settlement ($54.00-$60.50) weighted average $59.43. The corn futures moved higher in light activity. December futures were 1/4 cent higher Tuesday. The Dow Jones Index is 109 points lower with the Nasdaq down 13 points.

LIVE CATTLE

Despite mixed trade through much of the session, selling pressure became more aggressive near closing bell, leading the market mostly lower ($0.87 lower to $0.05 higher). December futures were the only contract able to hold onto higher prices, while strong selling pressure quickly moved into the nearby contracts and pushed prices nearly $1 per cwt lower through late-day trade. The overall lack of support in the market is not only concerning because of potential end-of-year directional shifts, but the combined pressure in both live cattle and feeder cattle markets may leave traders much more nervous as the week continues. Beef cut-outs: higher, $1.09 higher (select, $186.63) and up $0.89 (choice, $209.08) with moderate to good demand and moderate offerings (61 loads of choice cuts, 25 loads of select cuts, 10 loads of trimmings, 14 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 lower. Developing pressure in futures trade is creating uncertainty through the entire cash cattle market. Although at this point, it appears the pressure has not moved too aggressively into beef values. Packers are expected to keep bids lower, given the softness of futures trade. Active sales may still not be seen until the end of the week.

FEEDER CATTLE:

Sharp losses quickly developed in feeder cattle futures with traders focusing on increased pressure as the day continued. This moved most contracts sharply lower ($2.12 lower to $0.12 higher). Increased underlying weakness continues, which started with wide ranging losses last week. As front-month contracts broke through the $150 support levels, more liquidation flooded into the market. CME cash feeder index for 12/04 is $156.30 down $0.39.

LEAN HOGS:

Initial mixed trade in lean hog futures markets was unable to resist building pressure to back away from previous gains through the majority of the trading session Tuesday. Triple-digit losses developed in February and April contracts with overall weakness seen in all markets ($0.07 to $1.17 lower). Carcass values moved firmly higher as all primal cuts except for bellies posted firm gains, with many holding triple-digit support. Pork cut-out: $84.78 up $0.84. CME cash lean index for 12/01 $63.92, up $0.66. DTN Projected lean index for 12/04 $64.35 up $0.43.

WEDNESDAY'S CASH HOG CALL:

Steady. Lack of interest in futures trade is causing some expectations that cash markets will see some additional underlying pressure through the end of the week. Although the tone of the market remains focused on the potential support in pork values, there is increased interest in overall buyer activity still trying to keep procurement lines at full speed. Wednesday's slaughter is expected at 465,000 head with an expected Saturday run at 215,000 head.

Tuesday Midday Livestock Market Summary - Firm Pressure Sweeps Through Livestock Trade

GENERAL COMMENTS: 

Moderate to widespread selling activity has developed in livestock trade despite the early support which moved into the cattle complex Tuesday morning. This is likely to spark additional weakness through the near future, as traders continue to focus on longer term market direction. Corn prices are lower in light trade. December corn futures are 1/4 cent per bushel lower. Stock markets are mixed in light trade. The Dow Jones is 49 points lower while Nasdaq is up 19 points.

LIVE CATTLE:

Live cattle futures are trading in a moderate but mixed trading range after buyers quickly exited the market through the morning. Most contracts are holding losses of 20 to 50 cents per cwt with the overall lack of support in the complex focused on spring and summer contracts. The inability to sustain strong buyer interest adds to the already weak market tone which has developed over the last couple of weeks. Cash cattle trade is undeveloped at this point although bids are starting to develop Tuesday morning in the North at $187 per cwt. It is not expected that aggressive trade will develop over the near future, based on the sluggishness of asking prices to become well defined. A few loads of cattle have been reported priced at $121 live basis, but this is limited by the scope of activity through the morning. Beef cut-outs at midday are higher, $1.83 higher (select) and up $0.20 per cwt (choice) with light movement of 57 total loads reported (29 loads of choice cuts, 13 loads of select cuts, 8 loads of trimmings, 7 loads of ground beef).

FEEDER CATTLE:

Light to moderate pressure has developed in feeder cattle trade as market activity has moved from the firm gains seen early in the session and now focus on the overall consistent pressure in most cattle markets. Feeder cattle futures are holding losses of 15 to 90 cents per cwt with front month January futures leading the move lower as prices have fallen below $150 per cwt.

LEAN HOGS:

Strong price pressure has developed Tuesday morning as traders quickly backed away from previous market support. Even though prices are holding losses of $1 to $1.50 per cwt through most of the morning, the ability to draw additional volume to the market has been limited. This could minimize additional liquidation through the next several hours. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.05 at $59.09 per cwt with the range from $55.00 to $60.00 on 9,119 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $0.40 at $59.67 per cwt with the range from $57.00 to $60.00 on 3,940 head reported sold. The National Pork Plant Report posted 231 loads selling with carcass values adding $0.31 per cwt. Lean hog index for 11/30 is at $63.26 up $0.27 with a projected two-day index of $63.92, up $0.66.