DTN Closing Livestock Comments

GENERAL COMMENTS: Cattle on Feed numbers were increased to the highest levels reported in May, but were well off pre-report estimates. Limited direction was seen ahead of the report Friday. Additional market shifts could be seen next week, as traders have the entire three-day weekend to mull over report numbers and their potential impact. Cash cattle activity was quiet Friday afternoon following moderate-to-active trade Wednesday and Thursday. Cash cattle sold at $114 to $116 live and $184 to $185 dressed. This is generally steady to $2 per cwt lower than last week. Both sides are going back to the drawing board over the long holiday weekend, although limited interest is expected early next week with showlist distribution and inventory-taking the main focus Tuesday. The National Daily Direct afternoon hog report was $2.51 lower ($72-$80, weighted average $77.97) on 5,481 head sold. Corn futures surged higher in active trade with July up 14 1/2 cents per bushel. The Dow Jones Index was 95 points higher with the NASDAQ up 8 points.

LIVE CATTLE: Live cattle futures ended narrowly mixed ($0.37 lower to $0.40 higher) in limited-volume trade. Compared to the active movement in hog futures, direction was limited in live cattle trade Friday. Trade held in its current pattern as traders searched for additional news. Light-to-moderate support in beef values Friday morning while cash business remained quiet left traders looking for direction Friday afternoon. The Cattle on Feed numbers, released following the market close, will affect trade next Tuesday. However, the numbers should have a less dramatic impact than expected. Cattle inventory grew 2% in April, with May 1 totals at record levels since data has been collected. Cattle in feedlots increased 168,000 head from April 1 levels, indicating supply growth that will likely limit buyer activity. But total placements were well below pre-report estimates, which should help stabilize the market next week. Beef cut-outs: higher, up $1.94 (select, $208.47) to up $0.85 (choice, $221.64) with moderate demand and offerings, 100 loads (44 loads of choice cuts, 26 loads of select cuts, 13 load of trimmings, 16 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL: Steady. Given the short trading week next week, packers and feed yard managers are expected to become more aggressive, although activity is not likely on Tuesday. Showlist distribution and inventory-taking will still be the focus Tuesday.

FEEDER CATTLE: Feeder cattle trade was mixed on uncertainty ahead of the Cattle on Feed report. Futures closed 0.57 lower to $0.20 higher. Feeder cattle trade was sluggish ahead of the Cattle on Feed report. But the uncertainty generated by pre-report estimates turned out to be overblown, as cattle placements in April came in well below pre-report estimates, though still showed strong gains. Feeder cattle placements jumped 9% over year-ago levels with 1.8 million head moving to feed yards. This was a dip from March levels, showing seasonal declines developing. CME cash feeder index for 5/23 is $136.81, up $3.46.

LEAN HOGS: Lean hog futures dropped sharply late Friday, closing limit down ($1.62 to $3.00 lower). Late-week trade took an aggressive turn lower with all summer contracts setting limit losses of $3 per cwt. This will allow expanded trading limits early next week when markets open Tuesday. With markets closed Monday in observance of Memorial Day, traders appear to be extremely concerned about news developing over the weekend that would signal worsening trade relations with China. The pressure in pork values through the end of the week is putting pressure on market fundamentals, as well, leading to active liquidation in Friday's lightly traded market. Pork cutouts firmed following double-digit gains in rib cuts. Pork cutout values gained $0.65 per cwt, moving to $83.27 per cwt on 298 loads. CME cash lean index for 5/22 is $84.36, down $0.03. DTN Projected Lean Index for 5/23 is $84.02, down $0.34.

TUESDAY'S CASH HOG CALL: Steady to $2 lower. Pressure moving into the long holiday weekend and limit losses in lean hog futures is expected to spark additional cash market pressure. Most bids are expected steady to 50 cents lower early in the week. Tuesday's slaughter is expected at 471,000 head.

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

(AG)

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