DTN Midday Livestock Comments

GENERAL COMMENTS:

Hog futures have posted moderate to strong gains in most contracts Monday morning. The early pressure was quickly offset by buyer interest who had nowhere else to go due to the sharp pressure in cattle trade. The overall weakness in cattle markets has limited recent market support over the near future. Corn prices are lower in light trade. May corn futures are 4 cents lower. Stock markets are higher in light trade. The Dow Jones is 198 points higher while Nasdaq is up 72 points.

LIVE CATTLE:

Moderate to firm losses are seen in live cattle trade Monday morning. Although trade activity remains extremely sluggish, the focus on limited buyer support in all 2018 contract months is causing some traders to remain concerned about future beef demand. At current price levels, live cattle futures continue to hover in a sideways trading range as prices have had a hard time breaking through these previous support and resistance levels. This range could continue to be seen through the near future. Cash cattle markets are quiet, which is expected for a Monday morning. Show list distribution and inventory taking is the main order of business by all parties, and will likely limit any bids or active asking prices until Tuesday at the earliest and likely into midweek. The moderate cash trade seen last week may limit the need expedite trade as active sales may not be seen until the second half of the week. Boxed Beef cut-outs at midday are higher, $1.17 higher (select) and up $0.53 per cwt (choice) with light movement of 50 total loads reported (18 loads of choice cuts, 23 loads of select cuts, no loads of trimmings, 9 loads of ground beef).

FEEDER CATTLE:

Feeder cattle trade has led the market lower all session with triple-digit losses seen through the complex. May futures continue to lead the market lower with a $1.95 per cwt loss at midday. Even though strong pressure is seen in grain trade, the concern that moderate to strong follow through pressure may be present through most of the week. This could add even more weakness to the entire complex with traders looking for additional long term stability through the next few days in order to bring buyers back to the table.

LEAN HOGS:

Initial pressure seen in the lean hog futures was short lived as buyers quickly and aggressively moved into the market through the end of the morning. This moved summer contracts 60 to 90 cents per cwt higher at midday with the most aggressive support seen in the June futures trade. There is growing support that may continue to develop through the end of the session. Even though trade volume is likely to remain limited over the next hour of trade, the firming market direction could bring buyers to the table. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.22 at $58.52 per cwt with the range from $52.00 to $59.11 on 3,881 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report posted 125 loads selling with carcass values adding $1.85 per cwt. Lean hog index for 5/3 is at $63.13 up 0.20 with a projected two-day index of $63.29, up 0.16

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

(SK)

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