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DTN Midday Livestock Comments          05/04 11:54

   Sharp Pressure Developing in Deferred Cattle Futures 

   Strong losses have developed across late 2016 cattle contracts as traders 
remain concerned about longer-term supply-and-demand issues. The focus on 
short-term stability has brought light buying into nearby contracts, although 
the overall tone of the market remains weak. 

By Rick Kment
DTN Analyst



GENERAL COMMENTS: 

   Cattle futures have bounced higher and lower through the morning based on 
narrow trading volume, although the overall tone in the market continues to be 
based on lack of fundamental activity in the market. Lean hog futures remain 
firm fundamentally but are holding strong nearby losses as traders square 
positions midweek. Corn prices are mixed. May corn futures are 1 cent lower. 
Stock markets are lower in light trade. The Dow Jones is 106 points lower while 
Nasdaq is down 39 points.

   LIVE CATTLE:

   Even though moderate gains continue to hold in nearby live cattle futures at 
midday, the lack of follow through support across the complex has continued to 
limit overall buyer support across the market. This has allowed for strong 
losses to develop across the back end of live cattle futures trade, focusing on 
the pressure seen in the feeder cattle complex. Mixed trade is likely to be 
seen through most of the complex, although at the end of the session, there is 
likely to be some additional market shifts due to extremely light trade volume 
in the market. Cash cattle activity is generally quiet with a few bids starting 
to circulate in the North. These prices are listed at $188 to $190 per cwt 
dressed basis and $120 live basis, although the overall tone of the market 
remains soft given the overall lack of commitment through the market over the 
last couple of weeks. It is likely to be the end of the week before active 
trade develops. Beef cut-outs at midday are lower, $0.80 lower (select) and 
down $0.02 per cwt (choice) with active movement of 138 total loads reported 
(72 loads of choice cuts, 26 loads of select cuts, 11 loads of trimmings, 29 
loads of ground beef).

   FEEDER CATTLE:

   Sharp losses have now developed through the feeder cattle complex with the 
focus on deferred contracts as November markets are holding a $1.80 per cwt 
loss. The lack of support across the market continues to focus on the inability 
to draw buyer support into live cattle futures as well as redevelop cash cattle 
or beef value support back into the market going into the summer months.     

   LEAN HOGS:

   Firm pressure has continued to develop through the morning as traders 
continue to focus on short-term liquidation in nearby contracts. June futures 
are leading the complex lower, with a 90 cent tumble at midday, while the rest 
of the complex is limited to narrow losses of 20 to 40 cents per cwt. The lack 
of follow-through support is not surprising, but increased buyer activity may 
slowly develop just before closing bell. Cash prices are lower on the National 
Direct morning cash hog report. The weighted average price fell $1.38 per cwt 
to $68.61 per cwt with the range from $68.47 to $71.50 per cwt on 2,656 head 
reported sold. Cash prices are unreported due to confidentiality on the Iowa 
Minnesota Direct morning cash hog report. The National Pork Plant Report 
reported 254 loads selling with prices down $0.37 per cwt. Lean hog index for 
4/29 is at $71.77, up 0.64 with a projected two-day index of $71.77, up 0.66.

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


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