DTN Closing Livestock Comments

GENERAL COMMENTS

Cash cattle activity is quiet Monday with showlist distribution and inventory the main orders of business through the day. Bids and offers remain undeveloped at this point in the week and are likely to stay that way until Tuesday or Wednesday. This could limit additional trade activity until later in the week, although cattle feeders are expected to enter the week rather bullish given the movement in futures markets. According to the closing report, the national hog base is $0.91 higher compared with the Prior Day settlement ($70.00-$76.00) weighted average $73.88. The corn futures moved higher in light activity. July futures were 1/4 cent higher Monday. The Dow Jones Index is 22 points lower with the Nasdaq down 10 points.

LIVE CATTLE

Firm gains have continued to develop Monday in several contracts ($0.15 to $1.27 higher) as follow-through support from feeder cattle trade brought support back into the complex. The aggressive movement seen in boxed beef activity in the morning report also helped to bring about increased buyer activity in front-month June contracts. This moved spot prices above $132 per cwt, with a closing price of $132.10 per cwt as traders continue to look for increased long-term demand. Strong commercial interest remaining in the market could also keep traders focused on moves higher in the near future. Beef cut-outs: higher, $1.38 (select, $219.44) to up 3.11 (choice, $248.44) with light demand and moderate offerings (64 loads of choice cuts, 31 loads of select cuts, 11 loads of trimmings, 16 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL:

Steady to 2 higher. The ability to bring stability to cash cattle markets last week while strong market support is seen in futures trade over the last several days is helping to firm bullish anticipation in cash activity early in the week. Bids and asking prices remain undeveloped, but the expectation is that cattle feeders will become extremely bullish through the middle of the week.

FEEDER CATTLE

Strong triple-digit gains ($1.15 to $3.72 higher) have quickly moved into the feeder cattle market, leading the entire cattle complex to another aggressive rally Monday. This helped to draw buyer support back into the complex, with the most aggressive interest developing in 2018 contracts, pushing prices $2 to $3 per cwt higher as traders focus on long-term supplies. Even though gains in August futures posted the narrowest support, moving just $1.15 per cwt higher, the ability to test contract highs of $160.10 per cwt continues to put more long-term focus on further interest developing later in the week. CME cash feeder index: 6/2: $152.31, up $0.56.

LEAN HOGS

Losses developed in lean hog futures ($0.35 to $1.55 lower) as traders moved from narrow pressure early in the session to moderate-to-strong triple-digit losses across most contract months at closing bell. The overall lack of volume in the market allowed for late-day pressure to quickly spread through the lean hog market as July through December contracts fell $1.40 to $1.72 per cwt at closing bell. Even though early week pressure was seen in the market, fundamental support remains firm with many feeling that buyer activity is likely to redevelop later in the week. This dip may bring back active trade early Tuesday with nearby contracts squaring positions near $80 per cwt. Carcass values posted narrow losses. Light gains in hams and bellies were offset in sharp losses in ribs and light-to-moderate pressure in all other primals Monday. Pork cut-out: $91.18 down $0.22. CME cash lean index for 6/1: $77.34, up $0.55. DTN Projected lean index for 6/2: $77.90, up $0.56.

TUESDAY'S CASH HOG CALL

Steady to $1 higher. Light but firm price support is expected to continue through Tuesday. Most bids are likely to be seen steady to 50 cents per cwt higher as packers offset the slightly lower futures trade even with cash markets focusing on higher cash market trade early in the week. The potential for follow-through buyer support during the first full week of June could help to spark additional trade activity and could help to unify buyer support in most markets. Tuesday runs are expected to reach 440,000 head with Saturday levels expected to near 28,000 head.

John A. Harrington can be reached at john.harrington@dtn.com

(CZ)

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