Initial sharp losses have steadily eroded through the complex with steady buying moving into deferred lean hog contracts once again. Feeder cattle futures remain under pressure following strong gain market support. Corn futures are higher in active trade. July corn futures are 8 cents higher. Stock markets are higher in light trade. Dow Jones is 255 points higher with Nasdaq up 99 points.
Live cattle futures have bounced off early pressure as prices are mixed within a narrow range. Traders are moving away from strong pressure in feeder cattle with the focus moving more toward moderate to strong upcoming demand. The fact that hog futures have bounced back from sharp losses early in the session has helped bring spillover buying back to the live cattle trade. Even though prices are not expected to show significant support over the near future, the ability to remain steady to higher will be a significant moral victory to the complex. Cash cattle remains quiet with limited bids seen in the North at $115 to $116 live and $185 to $186 dressed. Trade in the south is likely wrapped up following trade Wednesday $3 per cwt lower than last week. Asking prices remain at $120 and higher live and $196 dressed. Boxed Beef cut-outs at midday are lower, $0.03 lower (select) and down $0.09 per cwt (choice) with active movement of 103 total loads reported (43 loads of choice cuts, 22 loads of select cuts, 12 loads of trimmings, 26 loads of ground beef).
Front-month May contracts are quickly eroding as trade is quickly exiting this contract and moving into August and September futures. Despite initial triple-digit pressure some limited stability is starting to redevelop through the August futures with prices holding a 95 cent loss. The focus on increased grain prices and how this will negatively affect overall feeder cattle buying in cash and futures trade is sparking additional softness. Gains in live cattle trade through the morning is helping to bring limited support to deferred contracts based on expectations of firm demand through the end of the year.
Initial pressure in hog trade following a bearish export sales report in which China canceled previous sales, has eased as the morning developed. Nearby futures are holding mixed trade in a narrow range. Although June and July futures are still under light pressure, gains in the rest of the complex are focused on the still bullish outlook for pork demand with or without direct China sales. The thought is that China is going to buy pork from someone, and even it isn't the U.S. due to the current trade war, reduced global supplies will open up other markets. It is quite possible that summer contracts may hold in a moderate range from $90 to $95 per cwt as traders focus on building support and market stability back into the complex. Cash prices are unreported due to confidentiality on the National Direct morning cash hog report. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values eroded following a loss of nearly $30 per cwt in rib cuts. Pork cutouts fell $0.52 per cwt at $86.29 per cwt with 160 loads traded. Lean hog index for 5/14 is $83.67 up 0.40, with a projected two-day index $84.20 up 0.53.
Rick Kment can be reached at email@example.com
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