Grain Commentary

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DTN Midday Livestock Comments 06/21 12:00

6/21/2019 - 12:32:00

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
DTN Analyst

General Comments

   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. 

   LIVE CATTLE:

   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).

   FEEDER CATTLE:

   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.

   LEAN HOGS: 

   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 rick.kment@dtn.com 


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