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DTN Midday Livestock Comments          02/28 12:01

   Friday Trade Follows Week's Trend Lower 

   Cattle futures continue to hold sharp losses late Friday morning as the 
glimmer of hope of market stability during early trade quickly eroded. Although 
prices have backed away from session lows, the market is expected to post 
moderate to strong losses at closing bell. 

By Rick Kment
DTN Livestock Analyst

General Comments

   Continued weakness quickly swept through the livestock complex Friday 
morning as aggressive follow-through pressure developed in the stock market and 
most outside commodity markets. Although there is little more information from 
a physical or economic model that would support the recent market losses over 
the last week, emotions continue to be the major factor in traders backing away 
from recent price levels. The mentality by most commercial and investment 
traders is that they would rather err on the bearish side and be willing to 
step back into the market, rather than to not sell until it may be too late. 
This mentality could keep prices subdued for an extended period of time. May 
corn is down 1/2 cent per bushel, and May soybean meal is up $2.00. The Dow 
Jones Industrial Average is down 704.42 points, and the NASDAQ is down 124.14 
points. 

   LIVE CATTLE 

   Live cattle futures have led the livestock market lower with triple-digit 
losses seen through most of the morning. Although the expiring February futures 
contract is trading on either side of unchanged at midday and has rallied over 
$2 from morning lows, the focus on spot April trade still holding sharp losses 
is creating additional technical pressure across the complex. The moves lower 
are creating psychological damage, as April futures have fallen below $110 per 
cwt, while June futures inch closer to the $100 threshold. In an emotionally 
driven market like has been seen this week, even numbers (Example: $100, $110) 
seem to have a significant role in maintaining or losing market momentum. April 
live cattle are down $1.92 at $108.55, June live cattle are down $1.30 at 
$102.60 and August live cattle are down $0.70 at $103.82. Cash cattle markets 
are likely done for the week with bids unavailable Friday morning. Feeders took 
their lumps in the cash market early in the week and are now hoping that the 
month of March will be kinder to them than last week. At this point, that would 
likely be a good bet.

   Boxed beef prices are mixed: choice down $0.24 ($205.30) and select up $0.86 
($200.55) with a movement of 62 loads (36.41 loads of choice, 7.75 loads of 
select, 5.65 loads of trim and 12.66 loads of ground beef). 

   FEEDER CATTLE 

   Moderate to firm losses have held in feeder cattle trade Friday morning. 
Although prices have quickly bounced off morning lows with March feeder cattle 
futures trading nearly $4 per cwt over session lows, the weaker tone in outside 
markets and especially continued pressure in live cattle trade is limiting any 
additional buyer activity. It is expected that traders will hold moderate 
losses going into the weekend and the end of the month. The hope is that the 
weekend break will help ease the emotional pressure from livestock trade. But 
overall market uncertainty may remain active early next week. March feeders are 
down $0.47 at $132.12, April feeders are down $0.60 at $133.50 and May feeders 
are down $1.10 at $134.42. 

   LEAN HOGS 

   Lean hog futures have been the most stable of the livestock trade Friday 
morning with losses limited to 50 to 90 cents per cwt in most contract months. 
The underlying pressure through the commodity and financial complex is still 
creating weakness concerning uncertain short- and long-term changes in pork 
demand. The focus of domestic markets continues to be if and when significant 
coronavirus cases are seen in the U.S and how the economy will handle it. April 
futures continue to hold near $62 per cwt, which remains above support levels 
set at the end of January. The ability to hold these levels through early next 
week will be huge in sustaining a sense of technical foothold in the complex. 
April lean hogs are down $0.40 at $62.10, June lean hogs are down $0.77 at 
$77.27 and July lean hogs are down $0.67 at $78.72. 

   The projected lean hog index for 2/27/2020 is down $0.03 at $56.33, and the 
actual index for 2/26/2020 is down $0.05 at $56.36. Hog prices are higher on 
the National Direct Morning Hog Report, up $0.27 with a weighted average of 
$50.61, ranging from $45.00 to $51.12 on 4,846 head with a five-day rolling 
average of $50.17. Pork cutouts totals and values are unavailable at this time 
due to reporting delays.

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


(CZ)

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