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DTN Midday Livestock Comments          08/19 12:06

   Feeder Cattle Contracts Lead Market Lower 

   Strong market shifts in feeder cattle futures have turned the entire 
livestock complex weaker Tuesday morning. This could lead to additional price 
pressure before the end of the session, even potential limit losses in nearby 
feeder cattle contracts. 

By Rick Kment
DTN Analyst



GENERAL COMMENTS: 

   Feeder cattle futures appear to be calling the shots Tuesday morning as lack 
of follow through buyer support has turned markets sharply lower at midday. The 
aggressive pressure in feeder cattle markets may test limit losses before the 
session is lower. This pressure in feeder cattle prices is eroding any sense of 
support which may have existed in both live cattle and lean hog futures. Corn 
futures are mixed at midday. September corn futures are 1/2 cent per bushel 
higher. Stock markets are higher in light trade. The Dow Jones is 78 points 
higher while Nasdaq is up 13 points.

   LIVE CATTLE:

   Lack of developing support through the morning and fear of further pressure 
has been the main drivers of the market pressure seen Tuesday. Trader interest 
seemed very confident of turning markets higher in early trade. But lack of 
follow-through support and a quick reversal in feeder cattle futures has 
quickly turned nearby and deferred futures weaker, holding triple-digit losses 
in all contracts through June 2015. This could lead to additional uncertainty 
in the market, especially given the softness in beef values leading up to the 
Labor Day holiday. Cash cattle activity is at a standstill Tuesday morning with 
not even a bid evident at this point. Asking prices are poorly defined but 
expected to be seen around $157 and higher in the South and $248 to $250 per 
cwt in the North. It would not be surprising given the tone of the market that 
active trade will be delayed until the end of the week. Beef cut-outs at midday 
are lower, 0.68 per cwt lower (select) and down $0.97 per cwt (choice) with 
active movement of 116 total loads reported (51 loads of choice cuts, 32 loads 
of select cuts, 12 loads of trimmings, 21 loads of ground beef).

   FEEDER CATTLE:

   Feeder cattle futures are showing significant losses Tuesday morning. The 
aggressive price swing through the complex is nearing $4 per cwt, following 
strong triple-digit gains during overnight trade that have eroded to losses 
well above $2 per cwt at midday. Little has changed fundamentally in the 
market, with a momentum shift being the culprit that seems to be driving this 
entire turn lower. 

   LEAN HOGS:

   Of all livestock markets, lean hog trade has been the most stable of the 
complex. Although strong pressure in the cattle markets is eroding early 
support seen in nearby and deferred contract months. The focus through the 
complex has less to do with any new information of market shifts in pork values 
or cash hog prices, than it does the underlying pressure flooding into the 
market following cattle prices which cannot seem to establish a foothold. This 
could continue to erode buyer support over the near future. Cash prices are 
lower on the National Direct morning cash hog report. The weighted average 
price fell $1.11 per cwt to $100.38 per cwt with the range from $100.00 to 
$102.00 per cwt on 630 head reported sold. Cash prices are unreported due to 
confidentiality on the Iowa Minnesota Direct morning cash hog report. The 
National Pork Plant Report is reported 212 loads selling as prices falling 
$1.05 per cwt. Lean hog index for 8/14 is at 114.70 down 1.72, with a projected 
two-day index of $113.04 down 1.66.

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


(SK)

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