DTN Midday Livestock Comments 02/04 12:13

Further Pressure Develops in Cattle Futures

Active triple-digit losses developed across cattle futures Tuesday morning
as traders extended early week losses. Active concern about upcoming trade
shifts for beef has cattle markets showing significant uncertainty. Hog futures
rallied Tuesday morning.

Rick Kment
DTN Analyst

GENERAL COMMENTS:

Firm follow-through pressure is developing in all live cattle and feeder
cattle futures, despite a sense of initial market stability early Tuesday
morning. The follow-through pressure is equally evident in nearby live cattle
and feeder cattle futures, where Monday's losses were most noticeable in feeder
cattle futures at the end of the trading day. Prices still remain well above
both 40- and 100-day moving averages, but markets have pulled significantly
away from all-time highs and that is creating additional market uncertainty.
March corn is up 6 3/4 at $4.955 and March soybean meal is up $8.50 at $312.2.
The Dow Jones Industrial Average is up 37.49 at 44,459.40.

LIVE CATTLE:

Live cattle futures started Tuesday morning with cautious optimism that the
aggressive price tumble may have run its course. But despite the stability at
opening bell, active selling pressure quickly and aggressively stepped back
into the market, allowing for moderate to sharp losses through most of the
morning. April futures are leading the market lower with increased concern of
global markets surrounding tariff talk and potential challenges that would
impact beef exports. But for now, traders seem to be content with current
midday losses as trade may remain sluggish through the end of the trading day.
Cash cattle markets remain very quiet early Tuesday with bids and asking prices
yet to be well established for the week. At this point, significant trade will
likely be delayed until the last half of the week. Both sides appear to be
hesitant to extend any indication of market direction given the aggressive
market volatility seen over the past couple of days. February live cattle are
$1.50 lower at $201.475, April live cattle are $2.50 lower at $197.65, June
live cattle are $2.10 lower at $192.375. Boxed beef prices are higher: choice
up $1.74 ($333.73) and select up $0.91 ($320.75) with a movement of 39.90 loads
(22.96 loads of choice, 10.19 loads of select, zero loads of trim and 6.75
loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have added additional price pressure as the session
continued Tuesday, although the initial indication was that market stability
may be established following the aggressive price tumble Monday. But lack of
underlying supportive buying activity just after opening bell allowed for
additional gaps to develop, allowing prices to tumble $1.80 to $2.10 per cwt at
midday. Nearby feeder cattle futures have now recorded a $10 per cwt price loss
since hitting all-time highs last week in January. The concern surrounding
price pressure in live cattle markets and uncertainty around global trade
activity in the coming months has caused traders to take a much less aggressive
view to the market than was seen just one week ago. March feeders are $2.55
lower at $267.95, April feeders are $2.80 lower at $267.025 and May feeders are
$2.80 lower at $265.175.

LEAN HOGS:

Lean hog futures rebounded Tuesday morning as traders retract most of
Monday's losses. April futures are leading the complex higher with gains of $3
to $3.50 per cwt. Uncertainty remains about how overall trade will be impacted
by all the tariff talk, but traders approached the market Tuesday in a much
more calm fashion. Nearby contracts are still well below last week's highs, but
the fact that lean hog futures have not continued to adjust lower similar to
moves in the cattle market is helping to create a slight sense of market
stability early in the week. February lean hogs are $0.78 higher at $85.1,
April lean hogs are $2.95 higher at $89.3, and May lean hogs are $2.73 higher
at $93.45. Hog Prices are unreported due to confidentiality Tuesday morning on
the Daily Direct Morning Hog Report. Pork cutouts totaled 175.54 loads with
158.35 loads of pork cuts and 17.19 loads of trim. Pork cutout values are up
$1.42 at $93.01.




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