DTN Closing Livestock Comments

GENERAL COMMENTS

Cash cattle activity on the Fed Cattle Exchange Auction report Wednesday listed a total of 2,067 head, with 1,257 actually sold, and 536 head listed as unsold, and 274 head passed out (PO). The state-by-state breakdown looks like this: KS 1,142 total head, with 606 head sold at $129.00-$132.50; Nebraska 199 total head, with 199 head sold at $132.50; Texas 358 total head, with 203 head sold at $132.00-$132.50 and 155 head PO at $130.50; Colorado 160 total head, with 160 head sold at $128.00; Iowa no test; other states (Oklahoma) 208 total head, with 89 head sold at $131.25, and 119 head PO at $130.00. The weighted averages are as listed: 1-9 day delivery: 618 head, $132.24; 1-17 day delivery 409 head, $132.06; 17-30 day delivery 230 head, $128.30. Feedlot activity remains extremely quiet midweek with both sides showing very little interest at this point in the game. Just a few scattered opening bids have been reported in Nebraska at $209, while some talk of a few asking prices through the South at $134 to $135 developed earlier in the day. It is likely that more evidence of bids and asking prices will be seen Thursday. But active trade may not develop until late Thursday or sometime Friday. According to the closing report, the national hog base is $1.54 higher compared with the Prior Day settlement ($67.00-$75.00) weighted average $73.58. The corn futures moved higher in light activity. July futures were 5 cents higher Wednesday. The Dow Jones Index is 19 points lower with the Nasdaq down 4 points.

LIVE CATTLE

Triple-digit gains moved into live cattle markets Wednesday with June futures moving $1.45 per cwt higher, closing at $124.42 per cwt. The firm support through the rest of the livestock complex as well as commercial support that is still unwilling to back away from the live cattle complex at this point has offset a strong portion of the market pressure seen over the last week. It is uncertain if follow-through buyer interest will continue as the calendar turns to June, but with increased consumer demand expected to keep focused on beef buying activity, firm interest may spark interest over the next few weeks. Beef cut-outs: mixed, $1.27 lower (select, $218.18) to up 0.29 (choice, $245.54) with moderate demand and heavy offerings (78 loads of choice cuts, 60 loads of select cuts, 18 loads of trimmings, 19 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady to 2 lower. The strong two-day rally in futures trade as well as holiday-shortened market activity may help to create momentum for feeders who could become even more bullish despite the end-of-the-week market pressure last week. At this point, cash market trade is likely to be pushed off to later in the week with Friday, or even late-Friday, market movement not unlikely. This could help to support the idea that short-bought packers may need to step up to the plate, moving close to steady money or higher by the time the week is over. However, at this point, there are not even enough bids or asking prices to get the ball rolling or a two-way discussion started.

FEEDER CATTLE

The feeder cattle futures market continues to remain aggressive following the Memorial Day holiday, with two consecutive trading sessions where nearby contracts posted aggressive triple-digit gains. Front-month contacts posted gains over $2.50 per cwt each of the two trading sessions so far this week, accounting for a $5.62-per-cwt rally in the front-month August contract this week. August futures posted a $2.65-per-cwt rally Wednesday, closing at $1.52.57 per cwt. The potential to draw additional buyer support through the first week of June could help to spark additional activity in all livestock markets, and help stabilize market fundamentals. CME cash feeder index: 5/30: $145.53, down $0.08.

LEAN HOGS

Renewed buyer support quickly moved back into the lean hog complex with summer contracts moving back to new contract highs. The pullback early in the week was replaced by aggressive triple-digit gains as buyers focused on market adjustments based on strong fundamentals and technical support. June futures posted a $1.42 rally, besting previous highs by 10 cents per cwt at $81.92 per cwt. July contracts continue to lead the complex higher, moving to $83.02 per cwt after a $2.02-per-cwt rally. The August-to-October price spread continues to widen to $13.75 per cwt, although further expansion in this spread may continue to develop through the summer months. Carcass values posted firm gains. Firm gains in butts, ribs and hams offset pressure in loins and picnics Wednesday. Pork cut-out: $91.00 up $0.87. CME cash lean index for 5/26: $76.45, up $0.11. DTN Projected lean index for 5/30: $76.53, up $0.08.

THURSDAY'S CASH HOG CALL

Steady to $1. Packers are expected to remain focused on gaining access to additional hogs through the end of the week as well as collecting enough market-ready hogs to meet the aggressive slaughter numbers expected Saturday. In order to try to make up for the lost day of production due to the holiday Monday, packers likely will have to dig deeper into their pockets as fundamentals continue to tighten through the entire industry. Most bids are expected to be steady to 50 cents higher, although it is expected that bids will be seen in all areas of the range. Thursday runs are expected to reach 440,000 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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