DTN Midday Livestock Comments

GENERAL COMMENTS:

Triple-digit gains have quickly developed across all livestock markets with strong commercial buyer support quickly seen in both cattle and hog markets. The focus on end-of-month positioning as well as fundamental shifts has allowed for additional triple-digit price swings at midday. Corn prices are higher in light trade. July corn futures are 7 cents higher. Stock markets are lower in light trade. The Dow Jones is 34 points lower while Nasdaq is down 15 points.

LIVE CATTLE:

Firm buyer activity has continued to develop through the morning Wednesday as traders not only focus on developing long term support across the market, but maintain firm support based on commercial interest in the market. This is helping to draw interest back into the market and post triple-digit gains in most all contract months. June live cattle futures have moved back above $124 per cwt at midday, holding a $1 per cwt rally. This is helping to spark the potential to draw long-term support through the rest of the complex and may quickly accelerate buyer interest at the end of the month. Cash cattle activity on the Fed Cattle Exchange Auction report today listed a total of 2,067 head, with 1,257 actually sold, and 536 head listed as unsold, and 274 head PO. The state-by-state breakdown looks like this: KS 1,142 total head, with 606 head sold at $129.00-$132.50; NE 199 total head, with 199 head sold at $132.50; TX 358 total head, with 203 head sold at $132.00-$132.50 and 155 head PO at $130.50; CO 160 total head, with 160 head sold at $128.00; IA 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. Activity in feedlot markets remains generally quiet with bids undeveloped at this time. A few asking prices have developed through the south at $134 to $135, although at this point, that may not create much activity. Bids may start to develop through the end of the day, although active trade is likely to be delayed until sometime Thursday or more likely Friday in both the South and Northern areas. Beef cut-outs at midday are mixed, $0.71 lower (select) and up $0.54 per cwt (choice) with moderate movement of 92 total loads reported (39 loads of choice cuts, 29 loads of select cuts, 10 loads of trimmings, 12 loads of ground beef).

FEEDER CATTLE:

Strong triple-digit gains has replaced the mixed trade seen during early morning activity with nearby futures testing gains of $2 per cwt. The focus on expanding the early week support as commercial and investment traders continue to move back into the cattle complex is helping to push prices back above the $150 per cwt price levels. August contracts remain the market leader Wednesday morning with prices holding a $1.95 per cwt rally at midday, nearing $152. The potential to not only draw additional fundamental support back into the live cattle market based on beef market interest over the next couple of months, but also to attract long term industry growth could help to maintain sustained buyer support which may help to offset previous market pressure.

LEAN HOGS:

Strong buyer support has quickly moved back into lean hog trade with commercial buyer support moving to new contract highs across the summer contracts once again. This has posted gains over $2 per cwt with June futures posting prices at $82.55 per cwt at midday while July futures continues to lead the complex higher at $83.22 per cwt. The overall support remains aggressive in all three summer contracts, and is helping to draw buyer activity into all hog markets even though light volume is keeping prices more subdued in deferred contracts. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report reported 182 loads selling with prices adding 0.96 per cwt. Lean hog index for 5/26 is at $76.45 up $0.11 with a projected two-day index of $76.53 up $0.08.

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

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