DTN Midday Livestock Comments 03/22 11:40
Selling Develops in Hog Futures
Following early buyer support, traders quickly backed away from all
livestock markets at midday. This allowed for increased market uncertainty at
the end of the week and mixed price levels.
By Rick Kment
Wide-ranging price swings swept through hog markets Friday with initial
strong gains quickly replaced by aggressive morning losses. The volatility in
the complex may continue through the end of the session given traders trying to
adjust positions at the end of the week. This volatility led to strong market
shifts in cattle trade midday Friday. Corn futures are higher in sluggish
trade, but have given back most of the early gains. May corn futures are 3/4
cent higher. Stock markets are lower in light trade. Dow Jones is 358 points
lower with Nasdaq down 152 points.
Narrow losses have trickled into live cattle trade as buyers seem to be
caught off guard by the sharp turnaround in hog trade. The momentum of this
shift has little impact on beef market fundamentals, but the entire livestock
market has been so emotionally charged by the recent surge in hog trade, that
any break from this pattern will impact all livestock futures. Mixed trade is
seen at midday, with nearby contracts 30 to 60 cents lower, while deferred
trade has stabilized with a 5 cent gain. Cash cattle interest is slowly
improving with live bids of $126 per cwt seen in all areas through the morning.
These bids are at the same price levels as seen earlier in the week, and
unlikely to get any attention from feeders at this point. Dressed bids have yet
to resurface Friday morning, creating the question if packers will wait until
late afternoon before even offering bids. Asking prices remain at $130 to $132
per cwt live and $210 dressed. Trade may be delayed until after the cattle on
feed report is released at 2 p.m. Boxed Beef cut-outs at midday are mixed,
$0.17 higher (select) and down $0.15 per cwt (choice) with light movement of 46
total loads reported (23 loads of choice cuts, 6 loads of select cuts, no loads
of trimmings, 11 loads of ground beef).
The aggressive turnaround in hog trade late Friday morning seemed to quickly
spark selling pressure through all cattle trade. Feeder cattle, which posted
early triple digit gains, have now turned lower, with most contracts 50 cents
to $1 per cwt lower. The volatility seen in the hog market caused spill over
buying through feeder cattle over the past week, but a similar impact is
expected if hog markets move quickly lower over the near future. Traders are
still expected to focus on underlying cattle market support, which could help
to bring buyers back into the market late in the session.
Trade in the hog complex has quickly and forcefully changed direction.
Initial buyer support flooded the market, moving summer contracts limit higher,
up $4.50 per cwt. But the over the last couple of weeks has quickly changed, as
buyers kept from moving into the market. This vacuum left the market open, as
active selling developed. At midday prices are $1 to $2 per cwt lower, with
concerns that the unchecked market rally could allow for further market swings
through the complex. The emotional nature that has led to the current market
levels can be a dangerous and double-edged sword. Cash prices are higher on the
National Direct morning cash hog report. The weighted average price added $1.01
at $65.16 per cwt with the range from $56.00 to $70.00, on 3,611 head reported
sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog
report. The weighted average price added $3.25 at $69.43 per cwt with the range
from $56.00 to $70.00, on 866 head reported sold. Pork values continue to shift
higher with strong gains seen in all primal cuts midday Friday. Pork cutouts
gained $1.02 per cwt at $77.27 per cwt with 196 loads traded. Lean hog index
for 3/20 is $60.75, up $1.53, with a projected two-day index is $62.41, up
Rick Kment can be reached at firstname.lastname@example.org
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