DTN Midday Livestock Comments

GENERAL COMMENTS:

Cash cattle traders are typically preoccupied with the distribution of showlists. The new offering appears to be generally steady (larger in Kansas and Colorado, smaller in Texas, and about steady in Nebraska). The national dressed-hog base at midday is not quoted due to rules of confidentiality. For the most part, corn futures are fractionally higher at midday, supported a bit by double-digit gains in beans and signs that the U.S. is making nice with China. The stock market is also higher in the face of better terms with China. The Dow at midday is 108 points higher with the Nasdaq 36 points in the green.

LIVE CATTLE:

Live cattle are really struggling at midday with prices mostly 102 to 200 lower. Friday's lower cash trade has apparently added fuel to the bearish fire, even though spot June now stands $16-17 below the latest feedlot business. Beef cut-outs are moderately higher at midday, up 0.55 (choice, $231.52) to 0.96 (select, $209.65) with very light box movement (24 loads of choice cuts, 16 loads of select cuts, zero loads of trimmings, 3 loads of coarse grinds).

FEEDER CATTLE:

Following the negative lead of the live market, the feeder market is also slumping with triple-digit losses near the top of the noon hour (i.e., off 155 to 260). On an estimated run of 10,000 head (up from 8,525 last week and 8,599 in 2017), Oklahoma City has not sold enough feeder steers and heifer at this point to establish a trend. Yet a lower undertone is noted.

LEAN HOGS:

With the exception of expiring May (set to go off the board at high noon CDT), lean hog contracts are significantly higher at midday (i.e., up mostly 37 to 142) with summer contracts leading the bullish parade. New life in Jun-Aug seems tied to improving fundamentals of both supply and demand. Some of the early week enthusiasm may be tied to friendly overtures to China over the weekend by President Trump to help Chinese technology firm ZTE Corp. Could this signal a general improvement in relations between the two country, one that might lead to China's relaxation of tariff's on U.S. pork. Who knows? Yet the story could plant seeds of positive speculation. Carcass value at midday solidly higher with all primals contributing to the whole (especially the belly). Pork cut-out: $73.27, up $1.23. CME cash lean index for 05/10: 64.06, up 0.33 (DTN Projected lean index for 05/11: 64.65, up 0.59).

John A. Harrington can be reached at john.harrington@dtn.com

(SK)

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