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DTN Midday Livestock Comments          08/16 12:11

   Feeder Cattle Futures Tumble Lower Wednesday Morning  

   Sharp losses have quickly developed in all livestock markets Wednesday 
morning. The aggressive gains seen Tuesday in feeder cattle markets has drawn 
active pressure back into the market with most feeder cattle contracts holding 
a $3 per cwt loss at midday. 

By Rick Kment
DTN Analyst

GENERAL COMMENTS: 

   Sharp losses have quickly and steadily developed through the morning 
Wednesday with traders focusing on backing away from previous market support. 
Feeder cattle futures are leading the market lower with losses near $3 per cwt 
across most contracts. This is a reaction to sharp gains which developed late 
in the day Tuesday, as traders try to unwind positions. The rest of the 
livestock market has been heavily influenced by the pressure in feeder cattle 
trade. Corn prices are lower in light trade. September corn futures are 3 cents 
lower. Stock markets are higher in light trade. The Dow Jones is 61 points 
higher while Nasdaq is up 24 points.

   LIVE CATTLE:

   Firm pressure has developed across live cattle trade Wednesday morning as 
the aggressive triple-digit losses in feeder cattle markets have completely 
wiped out buyer interest that developed early in the session. Nearby contracts 
are hovering between 50 and 90 cents per cwt lower as trade activity remains 
light. Deferred futures have posted triple-digit losses due to the aggressive 
pressure in feeder cattle markets working through the early 2018 cattle 
contracts. Cash cattle bids have slowly developed through the morning with live 
bids steady with sales seen Tuesday. Bids in Kansas are seen at $110 per cwt, 
while dressed basis bids in Nebraska are available at $175 to $177 per cwt. 
This is still well under asking prices of $115 to $117 live and $180 to $182 
dressed. Market activity on the Fed Cattle Exchange Auction report today listed 
a total of 1,184 head, with zero head actually sold, 1,017 head listed as 
unsold, and 167 listed as PO. The state by state breakdown looks like this: KS 
336 total head, with zero head sold, 336 head unsold, zero head listed as PO; 
NE 254 total head, with zero head sold, 254 head unsold, and zero head listed 
as PO; TX 514 total head, with zero head sold, 347 head unsold, and 167 head 
listed as PO ($112.00); CO 40 total head, with zero head sold, 40 head unsold, 
and zero head listed as PO; IA no cattle reported; other states (MO, Holsteins) 
40 total head, with zero head sold, 40 head unsold, and zero head listed as PO. 
Beef cut-outs at midday are lower, $0.27 lower (select) and down $0.36 per cwt 
(choice) with active movement of 127 total loads reported (87 loads of choice 
cuts, 18 loads of select cuts, 3 loads of trimmings, 18 loads of ground beef). 

   Feeder Cattle:

   Sharp losses have flooded into feeder cattle futures as traders are quickly 
starting to unwind previous market gains seen in the complex. With nearby 
feeder trade hovering near $3 per cwt losses, the recent support in the market 
which sparked late day buying Tuesday is not under attack, which could allow 
for additional widespread pressure to move back into the complex later in the 
week. Little to no basis from market fundamentals have been seen in the 
wide-ranging price swings over the last couple of days, allowing markets to 
shift within the very wide trading range. 

   LEAN HOGS:

   Strong losses have quickly swept through lean hog futures trade midday 
Wednesday as front month October futures initially were unable to hold prices 
above $70 per cwt during early trade. The shift below this support level has 
sparked additional widespread losses into all nearby lean hog futures with 
triple digit losses seen during late morning. October futures continue to lead 
the market lower with losses of $2.15 per cwt. The softness developing in 
cattle trade has added to the market weakness. Cash prices are lower on the 
National Direct morning cash hog report. The weighted average price fell $0.87 
at $76.19 per cwt with the range from $71.00 to $78.00 on 5,795 head reported 
sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog 
report. The weighted average price fell $0.06 at $77.44 per cwt with the range 
from $71.00 to $78.00 on 2,585 head reported sold. The National Pork Plant 
Report reported 235 loads selling with prices falling $2.12 per cwt. Lean hog 
index for 8/14 is at $84.38 down $0.40 with a projected two-day index of 
$84.03, down $0.35.   

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


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