DTN Midday Livestock Comments 10/18 12:08
Additional Losses Develop Thursday
Moderate to strong pressure is seen through the entire livestock complex.
Lean hog trade remains focused on additional nearby liquidation, accounting for
triple-digit losses at midday.
By Rick Kment
Moderate to strong pressure has developed across the livestock complex
Thursday morning. This is adding increased uneasiness through all trade with
hog markets showing the most aggressive weakness during morning trade. Corn
markets are lower in light trade. December corn futures are 4 cents lower.
Stock markets are lower in light trade. The Dow Jones is 277 points lower while
Nasdaq is down 120 points.
Narrow trading ranges seen early in the session has allowed for
follow-through pressure to develop. Most live cattle trade is holding losses
from 65 to 85 cents per cwt as many traders remain concerned surrounding the
moderate to sharp pressure that continues to develop in feeder cattle trade.
December contracts are holding a 70 cent loss, but it also appears that traders
remain cautious about adding additional active pressure to the market. Compared
to all other livestock trade, cattle futures seem to have remained much more
stable with traders still looking for strong overall demand support to help
keep prices from aggressively eroding quickly over the near future. Cash cattle
bids have quickly developed in all areas with live bids seen at $111 per cwt
while dressed bids are at $174 per cwt. There are reports of light live cattle
sales in the North at the $111 per cwt price level. This may set the tone for
the week. Asking prices on cattle not sold are seen at $113 to $114 per cwt
live and $176 and higher dressed. Boxed Beef cut-outs at midday are higher,
$1.25 higher (select) and up $2.20 per cwt (choice) with moderate movement of
78 total loads reported (44 loads of choice cuts, 14 loads of select cuts, 14
loads of trimmings, 6 loads of ground beef).
Feeder cattle futures are mixed in a wide range. Front-month October futures
continue to hold early support, pushing prices 77 cents per cwt higher. But
spring 2019 contracts are showing increased weakness with prices falling as
much as $1 per cwt through late morning. The lack of buyer support in most 2019
contract months is likely to add even more uncertainty to the entire complex.
This may spark some additional weakness through the complex which has been
focused on market liquidation through most of the week.
Firm pressure is holding through the morning in lean hog futures with nearby
contracts posting a $1.30 per cwt loss in December and February contracts.
Trade volume remains extremely limited through most of the complex, which may
keep markets holding the current trading ranges through most of the session.
There is expected to be some additional underlying weakness still developing
through the end of the week based on concerns of fundamental pressure in the
near future. Cash prices are unreported due to confidentiality on the
Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report
posted 187 loads selling on the morning report. Pork carcass values fell $0.16
per cwt at $78.36 per cwt. Lean hog index for 10/16 is at $68.17 down 0.42 with
a projected two-day index of 67.76, down 0.41.
Rick Kment can be reached at firstname.lastname@example.org
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