DTN Closing Livestock Comments

GENERAL COMMENTS: Cattle futures posted moderate losses in most contracts with feeder cattle closing 70 to 80 cents per cwt. Although late-day market shifts cut initial pressure in half, the weaker tone and lack of follow-through buyer interest from Friday's rally is causing traders to pause and wait for additional information later in the week. Hog futures remain mixed as limited buying was driven from deferred contracts and the focus is on long-term demand growth. Corn futures posted moderate gains in light trade. July futures added 5 3/4 cents per bushel. Dow Jones Index is 84 points lower with Nasdaq down 105 points.

CASH MARKETS: Cash cattle interest remains quiet early in the week with bids and asking prices undeveloped. The price pressure developing over the last couple of weeks is creating additional concerns of follow-through weakness through the end of the month. Showlists appear to be mixed with lighter totals in Kansas, while Texas and Nebraska are showing additional cattle for sale compared to last week. Additional interest is likely over the next couple of days following the growing trend of midweek trade over the last few weeks. The National Daily Direct afternoon hog report is $0.23 lower with a weighted average of $80.92 per cwt. Full range of $72.00 to $83.00 per cwt on 10,835 head sold.

LIVE CATTLE: Mixed trade developed as traders closely followed feeder cattle and corn trade ($0.57 lower to $0.17 higher). Limited volume developed in nearby live cattle futures Monday with traders showing little interest as prices continue to move away from recent market lows. June live cattle futures posted a 7 cent per cwt rally, as traders try to become well established in the choppy but sideways market trend. Following the ability to establish support levels at $109.50 in June futures and $106.72 per cwt in August contracts, traders have been looking for the opportunity to post further support. But early week pressure in feeder cattle and the renewed focus on rising grain markets have limited buyer activity late Monday. Beef cut-outs: mixed, $0.25 lower (select, $208.03) and up $1.14 (choice, $221.45) with light demand and offerings, 110 loads (68 loads of choice cuts, 24 loads of select cuts, 7 load of trimmings, 11 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL: Steady. Limited activity is expected through the early part of the week following weaker cash cattle trade this week.

FEEDER CATTLE: Firm pressure developed early Monday as traders backed away from previous gains ($0.32 to $0.82 lower). The overall lack of support early in the week has very little to do with market projections or any fundamental change in the complex, but more to do with traders taking positions following a bounce above long-term lows. The focus in the complex is expected to remain unstable although the expectation of renewed buyers moving into the complex should help spark some underlying support through the entire market. CME cash feeder index for 5/17 is unavailable at this time.

LEAN HOGS: Lean hog futures continue to wander within the wide sideways trend established during early May ($0.62 lower to $0.75 higher). Light-to-moderate support moved into late-summer and winter contracts as traders continue to focus on the potential for increased pork demand worldwide based on the impact of Asian swine fever. Even though the lack of a trade deal with China and increased tariff issues are at the forefront of most minds, the focus has been moving to the need to supply the world with pork, which is keeping traders positive for the time being. Although accurate numbers of hogs and pork production in China are hard to quantify, the potential remains that African swine fever totals may be larger than yearly U.S. production. The amount of pork produced in China alone as well as the demand in the country is hard to comprehend given current production levels. Pork cutouts firmed Monday following moderate to strong support in most primal cuts. Pork cutout values added $1.22 per cwt, moving to $85.13 per cwt on 258 loads. CME cash lean index for 5/16 is $84.59, up $0.38. DTN Projected lean index for 5/16 is $84.59, unchanged.

TUESDAY'S CASH HOG CALL: Steady to $1 lower. Packers continue to balance available market-ready hogs with the ability to maintain stable margin levels. This has continued to see lighter procurement levels as packers focus on margin improvement but still fulfilling current pork commitments. Tuesday's slaughter is expected at 465,000 head.

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

(AG)

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