DTN Closing Livestock Comments

Live Cattle Futures Surge to Limit Gains

Rick Kment
By  Rick Kment , DTN Analyst
(DTN file photo)

GENERAL COMMENTS

Cash cattle activity remains sluggish midweek with just a few token bids developing in the North on a dressed basis. Any bids seen through the day Wednesday are listed at $175 per cwt, which is well below asking prices of $184 to $185 per cwt. Bids are undeveloped in the South, although asking prices at this point are seen at $115 and higher. It is expected that with the limit gains seen Wednesday in futures trade, asking prices will increase significantly through the next couple of days. The Fed Cattle Exchange Auction Wednesday listed a total of 449 head, with 225 actually sold with a weighted average of $110.00, 224 head listed as unsold, and zero head listed as PO (Passed Offer). All cattle this week were from Kansas and are set for 1 to 9 day delivery. According to the closing report, the national hog base is $1.12 higher compared with the Prior Day settlement ($59.00 to $68.50) weighted average $66.80. The corn futures are lower in light activity. July futures were 6 1/2 cents lower Wednesday. The Dow Jones Index is 349 points higher with the Nasdaq up 75 points.

LIVE CATTLE

Strong buyer support in the last half of the trading session seemed to put a new perspective on the potential direction of the cattle complex ($1.42 to $3.00 higher). June and August futures surged higher late in the trading session with each contract closing higher with $3 per cwt gains. This will allow for expanded trading limits Thursday, although it is uncertain if the need for strong buyer support will exist following the breathing room given in the market overnight. However, the strong shift higher has pushed spot month June contracts to $106.12 per barrel with increased overall support likely to develop over the near future. Beef cut-outs: higher, $0.73 higher (select, $204.38) and up $1.12 (choice, $228.68) with light demand and offerings (78 loads of choice cuts, 47 loads of select cuts, five load of trimmings, 22 loads of coarse grinds).

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THURSDAY'S CASH CATTLE CALL:

Steady to $2 Higher. Cash market interest is still sluggish midweek and likely to be drawn late in the week. The sharp rally in futures trade should help to solidify bids, as they become more evident. However, active trade may not be seen until sometime Friday.

FEEDER CATTLE:

Sharp late day gains quickly moved through all feeder cattle futures following limit higher moves in live cattle ($2.82 to $3.57 higher). Sluggish market activity and narrow price shifts were seen early Wednesday. But following a strong surge in live cattle futures, buyers in the feeder cattle complex tried to keep up the pace. It wasn't until late in the trading session that prices moved above $3 per cwt as traders focused on the more aggressive buyer support that may continue to develop through the end of the week. CME cash feeder index for 5/29 is $134.86 down $0.18.

LEAN HOGS:

Strong buyer support moved through the complex with prices most aggressive in nearby trade (0.17 higher to $1.65 Higher). Aggressive moves seen in the cattle complex helped to bring even more market support to the complex. This is helping to draw even more interest into all contracts. June through August futures posted triple-digit gains, moving from $1.27 to $1.65 per cwt higher. July futures continues to lead the complex higher with prices at $80.12 per cwt. The overall support seen through the market midweek may spark additional underlying support through the end of the week. Pork prices trickled lower following mixed primal cut market shifts midweek. Pork cut-out: $76.05 down $0.29. CME cash lean index for 5/25 $69.46 up $0.02. DTN Projected lean index for 5/29 $69.50 down $0.04.

THURSDAY'S CASH HOG CALL:

Steady to $1 higher. Increased buyer support is expected to move into the complex through the next couple of days, as packer's access hogs for the increased Saturday runs. Due to the holiday schedule and strong futures trade, cash markets are expected to be scattered through the range, but the firm undertone is likely to hold. Thursday runs are expected to be seen near 460,000 head. Saturday runs are expected to hit 232,000 head.

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

(BE)

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Rick Kment