The cattle complex crashed sharply lower with aggressive long liquidation thumbing its nose to further evidence of cash strength. For the most part, lean hog futures settled modestly lower thanks in part to lackluster buying interest.
Midday: Firm commercial support is developing across lean hog futures trade Thursday morning. This is helping to bring additional underlying support back into the complex. Cattle markets remain weak with triple-digit losses in feeder cattle limiting market support.
Moderate to firm buyer support is holding in lean hog trade despite traders pulling price levels off of session highs. The cattle market remains under pressure as feeder cattle futures are leading the complex lower with triple digit losses seen in most contracts. Live cattle futures are firmly lower even though cash market support developed midmorning.
Corn prices are lower in light trade. March corn futures are 2 cents lower. Stock markets are lower in light trade. The Dow Jones is 60 points lower while Nasdaq is down 28 points.
Firm support in short-term fundamentals has been unable to spark any significant buyer support through the morning Thursday. Nearby contracts are confined to a tight trading range with 60 to 70 cent losses holding during late morning.
April live cattle futures are trading 67 cents per cwt lower, trading at $116.90 per cwt. The overall lack of support in the market continues to focus on the concern to draw active commercial buyer interest back into the complex over the long term.
Cash cattle markets turned active once again with cash trade developing in the Northern sector following active trade in the South Wednesday. Prices are seen at $126 to $127 live basis and $200 dressed.
This move higher is a $4 per cwt rally from last week’s price level and represents the aggressive desire for packers to quickly step into the market. It is likely that a few more cattle will be sold through the balance of the week, but prices are expected to be set at this point.
Beef cut-outs at midday are higher, $0.14 higher (select) and up $0.44 per cwt (choice) with light movement of 52 total loads reported (33 loads of choice cuts, 11 loads of select cuts, no loads of trimmings, 7 loads of ground beef).
Triple-digit losses have developed in all but front-month March contracts. The underlying pressure in the entire cattle complex is leading to even more market pressure in the feeder cattle market than the live cattle trade.
Even though cash cattle markets are firming nicely through the week, the long-term pressure in the complex is pointing to a moderate pullback, especially in feeder cattle futures. The uniformity seen in the market is limiting seasonality with all contracts through October trading within a $2 per cwt trading range.
Firm gains continue to hold across the lean hog futures trade at midday. The lack of follow through support in both cash values and pork values in the morning reports has limited buyer activity and pulled futures off of session highs. But there continues to be some underlying support in the market with front month April futures holding a 60 cent gain and trading at $69.02 per cwt midday.
Limited support is seen in deferred contracts, especially early 2018 contract months. But the focus on continued strong pork demand and supply tightness expected through the spring may keep buyers active for now.
Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $1.01 at $66.38 per cwt with the range from $62.00 to $69.75 on 5,465 head reported sold.
Cash prices are lower on the Iowa Minnesota Direct morning cash hog report. The weighted average price fell $0.81 at $67.29 per cwt with the range from $62.00 to $68.75 on 2,405 head reported sold.
The National Pork Plant Report reported 98 loads selling with prices fell $0.51 per cwt. Lean hog index for 2/28 is at $74.77 down $1.12 with a projected two-day index of $74.01 down $0.76.