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DTN Midday Livestock Comments          08/20 11:57

   Widespread Losses Continue Across Livestock Complex  

   Aggressive selling pressure is seen in both cattle and hog futures Wednesday 
morning with triple-digit losses seen in all cattle markets and all nearby lean 
hog futures. Weakness in meat values is adding to the already soft market 
condition.  

By Rick Kment
DTN Analyst



GENERAL COMMENTS: 

   Livestock futures are trading sharply lower with the focus on weakness in 
meat values as well as longer term uncertainty about commercial or 
noncommercial support. Feeder cattle futures are leading the market lower, 
holding losses near the daily trading limit of $3 per cwt. Corn futures are 
lower at midday. September corn futures are 4 cents per bushel lower. Stock 
markets are higher in light trade. The Dow Jones is 30 points higher while 
Nasdaq is up 2 points.

   LIVE CATTLE:

   Sharp triple-digit losses are holding through the live cattle complex with 
traders focusing on near limit losses in the feeder cattle market as well as 
additional weakness in beef values. Nearby losses are holding from $1.50 to 
$1.70 per cwt, with contracts hovering over the 100-day moving average levels. 
A break through this level could create some additional significant weakness 
through the complex and added liquidation. There is some focus being placed on 
potential demand support surrounding Labor Day Weekend needs, but for now, 
there is very little support driven by this activity. Cash activity remains 
quiet although bids have started to become more evident through midday. Bids 
are seen in Kansas at $151 per cwt, and across the North at $240 to $242 per 
cwt with bids from major packers at the lower end of that range. It is 
uncertain if the sharp turn lower in futures prices will cause traders to panic 
enough to move cattle at these levels, or if they will be willing to hold until 
later in the week. Asking prices are near $157 and higher in the South and $248 
to $250 per cwt in the North. Beef cut-outs at midday are lower, 0.80 per cwt 
lower (select) and down $1.65 per cwt (choice) with active movement of 137 
total loads reported (70 loads of choice cuts, 38 loads of select cuts, nine 
loads of trimmings, 19 loads of ground beef).

   FEEDER CATTLE:

   Feeder cattle futures continue to remain sharply lower, but have bounced 
back off of limit losses of $3 per cwt seen earlier in the session. But the 
lack of support in the complex is keeping prices within striking range of daily 
limits with September through January futures holding losses of $2.70 per cwt 
or greater. The lack of support in both the live cattle futures market, as well 
as inability for buyers willing to step in front of this fast moving train will 
likely keep markets on the defensive through the rest of the session. 

   LEAN HOGS:

   Weakness has quickly developed through the lean hog complex as losses in 
nearby contracts are comparable to pressure in the cattle complex. All 
contracts through the February contracts are trading over $2 per cwt lower with 
October and December losses nearing $2.50 per cwt. The lack of support in both 
cash and wholesale pork values as well as widespread outside market pressure is 
opening the door for even greater losses through the rest of the session. There 
is a chance that late day liquidation could lead to limit lower losses before 
closing bell, and potentially create some additional widespread pressure 
through the rest of the week. Cash prices are lower on the National Direct 
morning cash hog report. The weighted average price fell $1.46 per cwt to 
$97.93 per cwt with the range from $93.50 to $100.00 per cwt on 3,425 head 
reported sold. Cash prices are lower on the Iowa Minnesota Direct morning cash 
hog report. The weighted average price fell $3.56 per cwt to $95.95 per cwt 
with the range from $93.50 to $99.00 per cwt on 550 head reported sold. The 
National Pork Plant Report is reported 252 loads selling as prices falling 
$0.99 per cwt. Lean hog index for 8/18 is at 111.15 down 1.89, with a projected 
two-day index of $109.25 down 1.90.

   Rick Kment can be reached at rick.kment@dtn.com 


(SK)

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