DTN Midday Livestock Comments

GENERAL COMMENTS:

Strong buyer support has developed across front lean hog futures as fundamental support is quickly helping to offset the pressure which continues to develop in the cattle complex. There remains a strong underlying weakness in feeder cattle trade that is weighing heavily on the entire cattle market. Corn prices are lower in light trade. July corn futures are 2 cents lower. Stock markets are mixed in light trade. The Dow Jones is 4 points lower while Nasdaq is up 10 points.

LIVE CATTLE:

Live cattle futures remain under pressure with June futures holding a $1 per cwt loss. Front month futures continue to trade under $122 per cwt which sustained levels under these prices could bring about additional market bearishness in the near future not only in the futures trade but also through the cash markets. Overall lack of trade activity has been extremely obvious through the entire morning, leaving futures markets wandering in a wide price range during much of the morning. This could keep prices choppy through the rest of the trading session. Cash bids are nowhere to be found Tuesday morning with asking prices undeveloped as well early in the week. The expectation is that trade will develop during the last half of the week at this point with the overall lack of interest in futures trade limiting any overall optimism in the market at this point. The expectation is that packers will need to gain access to a moderate amount of cattle in order to fuel chain speed levels through the end of the month. But the previous pressure in the market may suggest a steady to lower market structure. Beef cut-outs at midday are mixed, $0.86 lower (select) and up $80 per cwt (choice) with light movement of 50 total loads reported (50 loads of choice cuts, 17 loads of select cuts, 6 loads of trimmings, 7 loads of ground beef).

FEEDER CATTLE:

Strong losses continue to hold through the end of the morning as nearby feeder futures remain sharply lower. May futures are $1.72 per cwt lower, while the rest of nearby futures are $2.22 to $2.22 per cwt lower based on follow through pressure. Even though these losses continue to post significant losses across the feeder cattle complex, markets have pulled back from contract losses seen earlier in the morning as seller pressure has eased due to lack of volume in the market. Traders seem to remain content with the current market prices although trade activity levels could continue to erode through the end of the session as has been the case in the recent past due to the overall lack of activity.

LEAN HOGS:

Strong buyer support continues to develop with June futures taking over as front month futures, and bringing additional life into the market. This is helping to spark buyer support with $1.35 per cwt gains holding moving prices to $78.60 in front month futures while July contracts are holding above $79 per cwt at midday. The firm support in all contracts is based on firm fundamental support as well as the potential to draw technical underlying buyers support back into the market through the end of May back into the complex. Cash prices are lower on the National Direct morning cash hog report. The weighted average price lost $0.97 at $68.95 per cwt with the range from $66.00 to $70.75 on 3,763 head reported sold. Cash prices are lower on the Iowa Minnesota Direct morning cash hog report. The weighted average price lost $0.79 at $70.14 per cwt with the range from $66.00 to $70.75 on 469 head reported sold. The National Pork Plant Report reported 224 loads selling with prices adding 0.31 per cwt. Lean hog index for 5/12 is at $71.94 up $1.31 with a projected two-day index of $73.01 down $1.07.

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

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