DTN Closing Livestock Comments

GENERAL COMMENTS: Buyers attempted to step back into the livestock markets Wednesday, but were unable to push futures higher at closing bell. However, increased market stability was seen as traders focus on firming demand and the potential to build on previous support through the end of the week. Cash cattle trade was slowly starting to develop Tuesday with morning trade in the South seen at $115 per cwt in Kansas and Texas. By the end of the afternoon, packers had reduced bids in some areas to $114 per cwt, but still gained limited trade volume. Limited Northern trade sold at $185 dressed basis, which may be enough to set the tone for the rest of the week. Generally, prices are steady on dressed trade and $1 to $2 per cwt lower live basis. The National Daily Direct afternoon hog report was $1.56 lower ($72-$82.50, weighted average $79.27) on 7,055 head sold. Corn futures posted moderate gains in light trade with July up 1/4 cent per bushel. The Dow Jones Index was 100 points lower with the Nasdaq down 34 points.

LIVE CATTLE: Pressure developed in live cattle trade Wednesday afternoon following mixed trade through much of the session. Futures settled $0.20 to $0.55 lower. Initial pressure was based on concerns that active selling may develop if Friday's Cattle on Feed numbers are as bearish as pre-report estimates predict. Analysts expect a 3% increase from year-ago levels and a record number of cattle on feed for May 1. But the current oversold status of the market limited early selling activity, allowing the market to look for increased stability. Following the market's close, the April Cold Storage report showed beef in freezers falling 5% from a month ago and down 9% from a year ago. This should help build renewed support early Thursday. Beef cut-outs: mixed, down $0.77 (select, $205.81) to up $0.17 (choice, $219.75) with moderate-to-good demand and light offerings, 172 loads (75 loads of choice cuts, 53 loads of select cuts, 8 load of trimmings, 35 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL: Steady to $2 lower. Following light trade Wednesday, additional market interest is expected to trickle into the market over the next couple of days. However, prices may be set near $114 to $115 live and $185 dressed. This is $1 to $2 per cwt lower live basis and steady dressed trade.

FEEDER CATTLE: The feeder cattle market continued to erode with only front-month May closing higher. The full range of closes was $0.40 lower to $1.07 higher. Front-month May shifted firmly higher with active support moving into the lightly traded contract as traders tried to narrow the price spread between May and August contracts. The rest of the complex remained under limited pressure following mixed trade. CME cash feeder index for 5/21 is $132.16, down $0.09.

LEAN HOGS: Limited pressure redeveloped in lean hogs Wednesday as traders slowly backed away from previous price levels. Futures closed $0.07 to $0.62 lower. Most contracts saw narrow losses with nearby trade down 30 to 42 cents at closing bell. Buyers stepped in and out of the complex Wednesday, shifting futures prices higher and lower. The inability to sustain midday gains allowed increased market pressure to develop, even though traders question further losses through the near future. Pork supplies in freezers increased 2% from March levels, but fell 2% from year-ago levels. Given the lack of export demand, these numbers continue to emphasis the impressive domestic demand seen so far this spring as hog production grows. Pork cutouts were down sharply on a double-digit loss in ribs. Pork cutout values fell $2.24 per cwt, moving to $84.83 per cwt on 297 loads. CME cash lean index for 5/20 is $84.37, down $0.22. The DTN Projected Lean Index for 5/21 is $84.39, up $0.02.

THURSDAY'S CASH HOG CALL: Steady to $1 lower. Little to no additional market direction is expected over the next couple of days with trade steady to weak in most sales following reduced plant activity and limited support through the entire hog complex. Thursday's slaughter is expected at 464,000 head. Saturday runs are expected near 43,000 head.

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

(AG)

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