DTN Midday Livestock Comments 04/22 12:02
Losses Sweep Through Complex Monday
Firm pressure has quickly developed Monday morning with cattle and hog
futures holding triple digit losses. There continue to be increased weakness
through the entire complex, although volume remains sluggish.
By Rick Kment
Strong early week losses have quickly developed through all livestock trade
with traders pulling away from previous gains seen last week. Concerns of
growing beef supplies and uncertain China demand has sparked triple digit
losses. Corn futures are lower in light trade. May corn futures are 1 3/4 cent
lower. Stock markets are mixed in light trade. Dow Jones is 29 points lower
with Nasdaq up 7 points.
Strong weakness in feeder cattle futures and generally pressure in most
commodity markets is adding to softness in live cattle trade midday Monday.
June futures are leading the complex lower with a $1.55 per cwt loss as traders
adjust to larger than expected cattle on feed as of April 1. This continues to
create concerns that additional market weakness may develop over the next few
trading sessions. Traders seem to be sensitive about posting significant market
shifts, which is likely to keep prices well contained in the current
sideways-moving market. Cash cattle interest is quiet following firmer trade
late last week. Show list distribution and inventory taking is expected to be
the extent of trade as bids and asking prices are not expected until midweek or
later in most areas. Boxed Beef cut-outs at midday are higher, $1.46 higher
(select) and up $0.98 per cwt (choice) with light movement of 34 total loads
reported (15 loads of choice cuts, 15 loads of select cuts, 4 loads of
trimmings, 1 load of ground beef).
Strong triple-digit pressure has quickly moved through feeder cattle trade
with October through January futures leading the market lower with $2.30 to
$2.50 per cwt losses. Traders are working through the larger-than-expected
cattle placement levels seen on Thursday's report, which may spark additional
underlying softness through the entire complex through the first half of the
week. Trade volume has slowed at midday, but the weaker tone in the market is
likely to be carried through the end of the session.
Strong pressure has continued to develop through all lean hog futures trade
with June futures leading the market lower with a $1.95 per cwt loss at midday.
The inability to sustain buyer support at the end of last week has added
uncertainty to the potential buyer interest through the end of the month. Even
though traders continue to look for increased pork sales to China and focus on
any potential trade agreement, the overall concern that the aggressive market
structure early in the month may be overstated and hard to maintain long term
is causing some traders to quickly reposition holdings, allowing for moderate
to strong price losses Monday morning. Cash prices are lower on the National
Direct morning cash hog report. The weighted average price fell $2.21 at $78.73
per cwt with the range from $73.00 to $79.46, on 5,170 head reported sold. Cash
prices are unreported due to confidentiality on the Iowa/Minnesota Direct
morning cash hog report. Pork values firmed in early week activity despite
limited volume. Pork cutouts added $0.46 per cwt at $87.70 per cwt with 111
loads traded. Lean hog index for 4/18 is $81.02 up 0.39, with a projected
two-day index is $81.54 up 0.52.
Rick Kment can be reached at firstname.lastname@example.org
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