DTN Midday Livestock Comments

GENERAL COMMENTS:

Gains in cattle futures is helping to stabilize the cattle market following a week of sharp losses. What started out being short covering seems to be firming support by increased commercial interest through the market as traders help to solidify buyer activity near $122 per cwt in June contracts. Corn prices are higher in light trade. July corn futures are 3 cents higher. Stock markets are lower in light trade. The Dow Jones is 249 points lower while Nasdaq is down 97 points.

LIVE CATTLE:

Firm buyer support is seen in live cattle futures with moderate to strong gains developing midmorning. Although gains have pulled off of session highs, the support seems to be based on the ability of traders looking for additional underlying commercial support in the market through the rest of the week. Lack of fundamental support in both cash and beef values may limit follow through futures trade during the end of the session, limiting the ability to maintain gains at closing bell. Cash cattle trade started to trade in Nebraska and Iowa feedlots Wednesday morning with regional packers paying $215 per cwt for cattle through the morning. This is $6 per cwt lower than last week's weighted average price. Not all of these cattle sold were for immediate delivery. Bids are seen at $130 to $131 live basis through the morning. The Fed Cattle Exchange Auction report today listed a total of 2,379 head, with 1,621 actually sold, and 758 head listed as unsold. The state-by-state breakdown looks like this: KS 309 total head, with 267 head sold at $134.00-$135.75; NE 758 total head, with 394 head sold at $130.00-$134.25; TX 966 total head, with 893 head sold at $133.75-$135.75; CO 108 total head, all unsold; IA no test; other states 238 total head (in SD and OK) with 67 head sold in OK at $134.00. The weighted averages are as listed: 1-9 day delivery: 814 head, $135.16; 1-17 day delivery 570 head, $134.28; 17-30 day delivery 237 head, $130.84. Beef cut-outs at midday are lower, $1.42 lower (select) and down $57 per cwt (choice) with light movement of 76 total loads reported (41 loads of choice cuts, 20 loads of select cuts, 5 loads of trimmings, 10 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have traded mixed in a narrow range with prices in all but front month May futures stick in 10 cent trading ranges of less at midday following sluggish activity. The overall lack of market movement seen during the morning and directionless activity in the feeder cattle complex seems to point to very little uncertainty in the ability to maintain any sense of buyer support over the next couple of trading sessions even if losses can be withheld through the end of the week.

LEAN HOGS:

Firm gains continue to hold in nearby lean hog futures at midday despite the back-and-forth moves seen during the morning. Summer contracts continue to knock on the door of $80 per cwt through the morning, but have been unable to break through that barrier at this point with that threshold being such a resistance that traders are unwilling or unable to break just yet. If any of the nearby contracts do move above these levels, it is likely that additional strong commercial buyer support will quickly move into the complex as traders will fill the void through the next couple hours. Cash prices are lower on the National Direct morning cash hog report. The weighted average price lost $0.92 at $70.27 per cwt with the range from $66.00 to $70.00 on 4,079 head reported sold. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report reported 266 loads selling with prices adding 2.50 per cwt. Lean hog index for 5/15 is at $73.01 up $1.07 with a projected two-day index of $74.14 down $1.13.

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

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