Lack of follow-through buyer support and strong pressure in outside markets has shifted the tone from early market firmness to sharp losses in live cattle trade. This could continue to keep markets vulnerable over the near future.
Strong losses through cattle futures trade early Tuesday has shifted the market focus from market gains in most contracts to overall uncertainty through the entire complex. Triple-digit losses in live cattle futures has led the recent selling pressure in all livestock markets.
Corn prices are lower in light trade. July corn futures are 8 cents lower. Stock markets are lower in active trade. The Dow Jones is 405 points lower while Nasdaq is down 44 points.
Triple-digit losses have swept through live cattle trade at midday. This has quickly eroded any sense of market support seen through the complex as traders look for additional news, which may bring some stability to the market. Triple-digit losses are seen in all the remainder 2018 contract months. That is adding to underlying concerns in market fundamentals.
Cash cattle activity remains quiet after an odd week of trade last week. The very limited activity seen in front of the holiday weekend would normally indicate that packers would be aggressive early in the week.
But the lighter procurement numbers needed for the short week and amount of previous cattle sold for deferred delivery is expected to fuel most of packers needs at this point. Bids and asking prices are still delayed but will likely improve by midweek.
Boxed beef cut-outs at midday are mixed, $0.09 lower (select) and up $0.60 per cwt (choice) with light movement of 46 total loads reported (25 loads of choice cuts, 16 loads of select cuts, no loads of trimmings, 5 loads of ground beef).
Early support in feeder cattle trade is quickly eroding with prices holding losses of 40 to 90 cents per cwt. The overall lack of market movement in the complex is focused on the strong triple-digit losses seen in live cattle trade late in the morning.
At this point it is too early to tell if these moves will spark additional pressure either later in the day, or through the rest of the week. But the swift move from strong early gains to the pressure across the complex is adding some short term market concerns.
Lean hog futures have quickly backed away from strong morning gains following the uncertainty for buyer support to move back into the complex. June futures are still leading the market higher, but gains are now at 67 cents per cwt in front month futures, with spot contracts trading just below $75 per cwt.
This lack of follow-through support is following the quick erosion in the cattle complex Tuesday morning. Trade volume is expected to remain generally light with traders focusing on longer term outside market direction.
Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.12 at $65.20 per cwt with the range from $58.00 to $66.00 on 3,952 head reported sold.
Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up $0.15 at $65.04 per cwt with the range from $58.00 to $66.00 on 1,140 head reported sold.
The National Pork Plant Report posted 112 loads selling with carcass values adding $2.52 per cwt. Lean hog index for 5/24 is at $69.44 up 0.15 with a projected two-day index of $69.46, up 0.02.