DTN Closing Livestock Comments

GENERAL COMMENTS

Cash cattle trade remained at a complete standstill Tuesday afternoon. This is not unusual for a holiday-shortened week. Bids will likely to develop sometime Wednesday. Trade may not turn active until sometime Thursday or Friday. According to the closing report, the national hog base is $0.94 higher compared with the Prior Day settlement ($65.00-$74.00) weighted average $72.03. Corn futures moved lower in light trade. July futures were 7 cents Lower Tuesday. The Dow Jones Index is 41 points lower with the Nasdaq down 6 points.

LIVE CATTLE

Firm buyer support eventually stepped into the market Tuesday as traders backed away from early selling pressure (0.27 to $1.42 higher). Volume was light and the overall tone of the complex firmed as the trading session developed. August through December contract months seemed to get the most attention, due to supply issues and expectations for beef beef demand through the last half in the year. October contracts led the market higher with a $1.42 per cwt rally. June futures, even though markets only posted a 27-cent gain, remained firmly above $122 per cwt, causing some additional underlying support to develop through the rest of the complex. Beef cut-outs: mixed, $1.14 higher (select, $219.59) to down 0.21 (choice, $245.39) with light demand and offerings (54 loads of choice cuts, 53 loads of select cuts, 13 loads of trimmings, 10 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to 2 lower. Market activity remains undeveloped Tuesday with bids and asking prices still quiet. All participants are likely to become more active later in the week with bids likely to develop Thursday or Friday. The defensiveness of futures trade last week will make it hard to bring firm support to the cash market.

FEEDER CATTLE

Sharp gains quickly developed in feeder cattle futures Tuesday afternoon following the inability for follow- through trade to continue to develop across the complex ($1.37 to $2.97 higher). The gains have little to do with any bullishness in the market, but are more tied to the fact that traders view the $4 per cwt losses seen Friday following the Cattle on Feed report, as well as the previous losses last week in the feeder cattle, as a little too over the top. Even though total cattle placements were well over expected amounts and total marketed is far from bullish, traders seem to be taking a more balanced approach through the end of the day Tuesday than they did before the weekend break. Much of this has to do with the Cattle on Feed report coming out during trading hours on Friday, rather than the normal time when markets are already closed and traders have a full weekend to digest the market data and give numbers time to settle before emotions take over. But the volatility of the last two trading sessions may lead to even more market shifts early Wednesday. CME cash feeder index: 5/29: $145.61, up $0.59.

LEAN HOGS

Lean hog futures traded mixed during initial early week trade with narby contracts focusing on position-taking ($1.32 lower to $0.17 higher). Moderate pressure developed in June and July lean hog futures as traders backed away from aggressive contract highs that developed last week. June futures were $80.50 per cwt, up $1.35, following moderate position-taking after the long holiday weekend. Lack of movement in the rest of the complex created additional shifts in deferred contracts where light gains of 2 to 20 cents were posted. Trade volumes were extremely light. Carcass value trickled lower. Triple-digit gains in ribs were offset by light to moderate losses in most all other primals Tuesday. Pork cut-out: $90.13 down $0.13. CME cash lean index for 5/15: $76.34, up $0.09. DTN Projected lean index for 5/26: $76.45, up $0.11.

WEDNESDAY'S CASH HOG CALL

Mixed. Early bids Wednesday are expected to be in the same mixed bag as seen early Tuesday when packers returned from the long holiday weekend. With the firmness in both fundamentals and technicals last week countered with early protection taking, there seems to be some uncertainty as to how aggressive packers will or can be going into June. Bids are expected to be from $1 lower to $1 per cwt higher, although most bids are expected to be steady to $1 higher. It is likely that most bids are likely to be higher in order to fuel strong end-of-week procurement plans. Wednesday runs are expected to reach 442,000 head as Saturday levels are likely to approach 220,000 head.

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

(CZ)

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