DTN Closing Livestock Comments

GENERAL COMMENTS: Limited movement early Friday left the door open for increased market volatility late in the day. Aggressive selling developed in all livestock markets. Feeder cattle futures led the market tumble with the August contract down $5.10 per cwt as traders took advantage of expanded trading limits. From Friday to Friday, livestock futures scored the following changes: Jun LC off $2.70; Aug LC off $4.88; Aug FC off $10.10; Sep FC off $9.80; Jun LH off $4.70; Jul LH off $2.03. Cash cattle activity remains quiet Friday afternoon, as it appears both sides are done for the week following moderate trade Wednesday and Thursday. A few bids remain at $115 live and $186 dressed, but given the late-day freefall in futures trade, these are not likely available at this point. Asking prices are at $116 and higher live and $188 dressed, but both sides appear willing to wait until early June before additional activity develops. The National Daily Direct afternoon hog report was $0.88 lower ($70-$78, weighted average $76.70) on 11,612 head sold. Corn futures were lower in active trade with July falling 9 cents per bushel. The Dow Jones Index was 354 points lower with the NASDAQ down 114 points.

LIVE CATTLE: Live cattle futures fell by triple digits Friday. ($1.10 to $1.97 lower). Mixed trade early in the session and a strong reversal lower in corn prices Friday were not enough to stimulate to buyer support and keep prices stable. The August contract led the complex lower, down $1.97 per cwt, setting a new contract low and testing long-term support of $102.40 set in May 2018. This selling pressure is much more complex than seasonal market pressure or end-of-the-month positioning. The sharp gains in grain futures over the last couple of weeks have led to increased concern about beef production costs as well as supply availability. The feeder cattle market has been affected most, but live cattle futures have followed feeder cattle lower. Even though less beef is expected to be seen due to higher costs of production, the grain market moves seem to be creating long-term shifts in the entire market structure. Beef cut-outs: lower, down $1.18 (select, $207.69) to down $0.37 (choice, $223.21) with moderate demand and offerings, 112 loads (55 loads of choice cuts, 31 loads of select cuts, 9 loads of trimmings, 16 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL: Steady. Early week, trade is not expected with showlist distribution and inventory-taking taking place Monday. The sharp losses in futures trade and lack of beef support is creating additional concerns of further cash market pressure in early June.

FEEDER CATTLE: Feeder cattle futures saw sharp losses of $1.77 to $5.10 as traders liquidated positions Friday. Though traders tried to cover short positions and stabilize prices early in the day, the August futures led the complex lower, falling $5.10 per cwt in late-day trade. Bearishness in the feeder cattle market continues to build even though the market appears to be oversold. Concerns about additional corn market gains on uncertain supplies through the end of the year have added to the volatility and pushed feeder cattle futures lower. Spot futures have fallen $9 per cwt in the last three sessions and over $27 per cwt since mid-April. The bearishness in the market is likely to continue during early June. CME cash feeder index for 5/30 is $132.47, down $2.53.

LEAN HOGS: Despite an attempt to bring buyers back to the market early in the day, sharp end-of-the-month losses pushed lean hog futures $0.87 to $2.27 lower. Active selling moved into the lean hog complex late Friday, leading to triple-digit losses in all but late-year contracts. Most nearby contracts held losses at or near $2 per cwt. The July contract closed at $85.92 per cwt, but remains slightly above support levels set earlier in the week. The ability to keep prices at or above these levels in early June is expected to help bring additional buyer interest back into the market. Although demand for pork is expected to increase through the end of the year, trade issues with China remain an uncertainty. Pork cutouts firmed Friday following mixed moves in primal cuts. Pork cutout values gained $0.83 per cwt, moving to $82.68 per cwt on 258 loads. CME cash lean index for 5/29 is $82.22, down $0.34. DTN Projected lean index for 5/30 is $81.92, down $0.30.

MONDAY'S CASH HOG CALL: Steady to $2 lower. Continued pressure is expected to filter into early June with packers still trying to limit spending given the choppy moves in pork values over the last couple of weeks. Most bids are expected $1 per cwt lower Monday. Monday's slaughter is expected at 464,000 head.

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

(CZ)

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