DTN Midday Livestock Comments 06/21 12:00
Sharp Losses Develop Across Livestock Futures
Livestock futures posted triple-digit losses as nearby contracts broke
through short-term support levels. Additional liquidation is expected through
the end of the week.
By Rick Kment
Sharp losses developed in all livestock trade Friday morning with nearby
lean hog futures posting limit losses of $3 per cwt. Late-morning buying
developed, with live cattle futures currently mixed as traders cover short
positions in front of the weekend break, and afternoon cattle on feed report.
Corn futures are lower in light trade. July corn futures are 1 cent lower.
Stock markets are mixed in light trade. Dow Jones is 40 points higher with
NASDAQ down 17 points.
Sharp losses Friday morning created additional market pressure through the
entire complex, allowing nearby contracts to break through support levels
during morning trade. Limited follow-through selling late Friday has sparked
short covering in deferred contracts. This may add increased underlying
stability through the end of the week with traders trying to adjust positions
following sharp market swings during the last couple of weeks. Market closes at
current price levels would hold prices above short-term support levels and
maintain the sideways trading range seen over the last couple of months.
Traders are also starting to adjust to the upcoming cattle on feed report. With
light to moderate cattle on feed increases expected, markets are not expected
to show significant market shifts. Cash cattle interest remains sluggish with
limited bids redeveloping at the lower end of range Thursday. Live bids of $109
to $110 live are seen and $178 dressed. It is uncertain if additional trade
will develop before the weekend. If trade does develop, feeders may wait until
after the cattle on feed report before pulling the trigger on extra cattle
sales for the week, otherwise holding off until next week before selling into
this lower market trend. Boxed Beef cut-outs at midday are lower, $0.46 lower
(select) and down $0.72 per cwt (choice) with light movement of 52 total loads
reported (18 loads of choice cuts, 16 loads of select cuts, 7 loads of
trimmings, 11 loads of ground beef).
Follow-through pressure continues to develop in feeder cattle trade. This
may add increased underlying weakness through the end of the week. Although
prices remain lower Friday, markets have pulled off session lows with August
futures now holding narrow losses. Pre-report adjustments are developing
midmorning Friday as traders are focusing on reduced cattle placements in May,
compared to year-ago levels. Grain trade has stabilized, but this is still
leaving concern about overall production costs and feed supply levels through
the next year.
Limit losses have developed across nearby lean hog trade following active
selling over the last two trading sessions. The most recent pressure has broken
through short-term support levels established last week, with futures trading
at three-month lows. There is expected to be some additional underlying
pressure as traders search for technical support through the end of June. Cash
prices are lower on the National Direct morning cash hog report. The weighted
average price is down $0.64 at $74.08 per cwt with the range from $66 to $76 on
5,191 head reported sold. Cash prices are unreported due to confidentiality on
the Iowa/Minnesota Direct morning cash hog report. Pork values shifted lower
following firm pressure in most primal cuts. Pork cutouts fell $0.36 per cwt at
$75.84 per cwt with 142 loads traded. Lean hog index for 6/19 is $79.55, up
0.06, with a projected two-day index is $79.14, down 0.41.
Rick Kment can be reached at firstname.lastname@example.org
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