DTN Midday Livestock Comments 02/19 11:44
Hog Prices Weaken
Widespread pressure swept through hog futures Tuesday morning as traders
pushed all nearby contracts to limit lows.
By Rick Kment
Early selling in April lean hog futures gained momentum Tuesday with prices
breaking through long-term support levels and setting contract lows. All nearby
contracts traded $3 per cwt lower midday Tuesday. Cattle markets have shifted
higher with traders looking for refuge from the hemorrhaging hog complex. March
corn futures are 3 1/4 cents lower. Stock markets are higher in light trade.
Dow Jones is 35 points higher with Nasdaq up 26 points.
Aggressive gains flooded back into live cattle trade as traders who were
fleeing the hog complex looked for refuge. This allowed for additional market
support to move into all nearby trade, pushing April futures to new contract
highs through the morning. April futures are holding a $1.82-per-cwt rally, at
$129 per cwt, with firm support developing in all futures. Cash markets remain
undeveloped early in the week with showlists steady to lighter this week in
most areas. This could allow for increased firmness from feedlot managers when
asking prices are seen later in the week. Bids and asking prices are
unavailable and will likely be unavailable until midweek or later. The futures
market volatility may add increased cash market shifts as the week continues.
Boxed beef cut-outs at midday are higher, up $1.74 (select) and up $0.87 per
cwt (choice) with light movement of 54 total loads reported (38 loads of choice
cuts, 8 loads of select cuts, 3 loads of trimmings, 5 loads of ground beef).
Buyers quickly moved back into cattle trade Tuesday morning following the
sharp pressure in hog contracts and lackluster interest in most outside
markets. This led to triple-digit gains in feeder cattle futures, replacing
late-week losses on Friday. Traders continue to look for longer-term market
direction, which is adding some increased volatility in the complex. March
futures are leading the complex higher with a $1.75 per cwt gain, based on
support in live cattle trade.
Fueled by continued weak market fundamentals, initial selling stepped back
into the complex. Within the first few minutes of trade, this broke through
long-term support and contract lows in April futures, establishing a bearish
market reversal in the complex. The weaker momentum has been too much to
overcome in all nearby contracts with all contracts through August holding
limit losses of $3 per cwt. It appears that the pressure is enough to hold
prices at these lows through closing bell, which would allow expanded trading
limits Wednesday. Cash prices are higher on the National Direct morning cash
hog report. The weighted average price is up $0.04 at $48.29 per cwt with the
range from $44.50 to $49.00 on 7,419 head reported sold. Cash prices lower on
the Iowa/Minnesota Direct morning cash hog report. The weighted average price
is down $0.27 at $48.38 per cwt with the range from $44.50 to $49.00 on 4,109
head reported sold. Pork carcass values slipped Tuesday following weakness in
loin and belly cuts with prices falling $0.56 per cwt at $61.02 per cwt with
230 loads traded. Lean hog index for 2/15 is $54.74, down $0.28, with a
projected two-day index is $54.43, down $0.31.
Rick Kment can be reached at email@example.com
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