DTN Closing Livestock Comments

GENERAL COMMENTS

Cash cattle trade was undeveloped late Tuesday afternoon, following aggressive losses in futures and concern that additional widespread pressure may continue to develop the rest of the week. A few scattered bids were noted in Iowa at $119, but asking prices remain undeveloped in all areas. Active trade may not be seen until after midweek. The Federal Cattle Exchange Auction will trade Wednesday morning. This will give the first indication of cash market activity for the week. It is uncertain just how much volume will be seen before the holiday week. Recent futures pressure may limit sales volume. According to the closing report, the national hog base is $0.03 lower compared with the Prior Day settlement ($81.00-$87.00) weighted average $85.75. Corn futures moved higher in light activity. July futures were 1/4 cent higher Tuesday. The Dow Jones Index is 66 points down with the Nasdaq down 90 points.

LIVE CATTLE

Strong downward price action developed Tuesday morning as traders pulled away from Monday's support. This created sharp selling pressure in all futures contracts -- $1.87 to $3.25 lower. Due to the expanded trading limits, prices fell more than the normal $3 per cwt levels. This is expected to create even more volatility through the rest of the week, as traders are likely to enter the market Wednesday morning on the defensive. June futures are trading once again under $120 per cwt. Beef cut-outs: lower, $2.40 lower (select, $215.26) to down $4.66 (choice, $233.91) with light demand and moderate offerings (59 loads of choice cuts, 38 loads of select cuts, 17 loads of trimmings, 15 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady. Packers and feeders still remain unwilling to actively step off of the sidelines at this point given the sharp downward tumble of futures Tuesday. A few bids slowly developed in Iowa on a live basis through the morning at $119 per cwt, but these were far from getting an offer at this point. Traders will focus on the Fed Cattle Exchange Wednesday morning, which may help start the ball rolling and instill some additional momentum through the entire complex.

FEEDER CATTLE

Strong triple-digit losses quickly eroded most of Monday's gains in feeder cattle futures ($2.07 to $4.57 lower). Expanded trading limits Tuesday allowed feeder cattle futures to move beyond the typical $4.50 per cwt price change normally seen during a trading day. This lack of support will create even more volatility in the upcoming days and likely will bring additional pressure to the entire cattle complex. CME cash feeder index: 6/13: $153.92, down $0.29. CME cash feeder index: 6/26: $146.42, up $0.56.

LEAN HOGS

Lean hog futures closed in a moderate to widely mixed trading range ($0.72 lower to $0.37 higher) following lack of activity through most of the session. The overall lack of direction in the complex left markets focusing on position-taking opportunities as short-covering focused traders entered nearby contracts. Nearby contracts saw light to moderate pressure despite fundamental support expected as traders try to adjust positions ahead of the holiday weekend and end of the month. Pork values have bene strong through the summer and this continues to draw buyer support through the entire complex. Carcass values firmed on moderate volume. Gains developed in all primals with the most support seen in loins and butts. Pork cut-out: $102.31 up $0.96. CME cash lean index for 6/23: $90.62, up $0.45. DTN Projected lean index for 6/26 $91.10, up $0.48.

WEDNESDAY'S CASH HOG CALL

Steady to $1 higher. Packer schedules are expected to remain generally stable through the next several days with overall market firmness likely to develop through midweek. The trading range is expected to be steady to higher, although most bids will likely remain $1 per cwt higher early Wednesday morning. Expected slaughter numbers Wednesday are 430,000 head with an estimated 21,000 head likely on Saturday.

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

(CZ)

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