DTN Closing Livestock Comments

GENERAL COMMENTS: Lean hog futures closed down the $3-per-cwt limit Friday, which will trigger expanded limits Monday. Cattle futures also fell late Friday, breaking through short-term support. From Friday to Friday, livestock futures scored the following changes: Jun LC off $2.23; Aug LC off $2.05; Aug FC off $1.85; Sep FC off $1.75; Jul LH off $5.10; Aug LH off $2.72. Cash cattle trade appears to be done for the week following light-to-moderate trade Thursday. A few scattered bids were seen at $109 to $110 per cwt live basis and $178 dressed, but the lack of interest at the lower prices is likely to keep most cattle on showlists until next week. The National Daily Direct afternoon hog report was $0.69 lower ($65-$76, weighted average $74.03) on 8,216 head sold. Corn futures eroded Friday afternoon with July down 7 3/4 cents per bushel. The Dow Jones Index was 34 points lower with the NASDAQ down 19 points.

LIVE CATTLE: Live cattle futures closed $0.42 to $1.72 lower. The August contract led the market lower, falling $1.72 per cwt to close at $102.22 per cwt. With this end-of-the-week move, the August contract broke through support of $102.80 per cwt set in May and moved out of the sideways trading range it had been confined to for the last couple of months. The live cattle market could come under pressure again early next week given weaker fundamentals and technical pressure seen over the last couple of days. The June 1 USDA Cattle on Feed report showed a 2% gain from a year, which was above pre-report estimates but is not likely to create significant pressure when trade resumes on Monday. Concern that beef supplies will remain burdensome while demand remains sluggish may continue to pressure the market. Beef cut-outs: lower, down $1.93 (select, $199.55) to down $0.90 (choice, $219.82) with light demand and moderate offerings, 99 loads (37 loads of choice cuts, 37 loads of select cuts, 10 loads of trimmings, 16 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL: Steady. Firm pressure in cash and futures trade late in the week will likely soften initial activity next week, although showlist distribution and inventory-taking may be the limit of movement Monday.

FEEDER CATTLE: Feeder cattle futures closed $1.05 to $1.32 lower. Even though corn futures fell 6 to 7 cents Friday, it wasn't enough to support buyer interest in feeder cattle trade. Contracts still remain in the current trade range, although a breakthrough in support levels could bring about increased pressure next week. CME cash feeder index for 6/20 is $131.37, down $1.62.

LEAN HOGS: Lean hog futures closed $0.52 to $3 lower. Losses quickly swept through lean hog futures Friday morning, leading to limit losses of $3 per cwt in the first three contract months. A lack of buyer support sparked technical pressure with prices breaking through support levels. Contracts moving below $80 per cwt is significant, as this is not only a three-month low, but is nearing lows set in early 2019. A move below $76.46 per cwt in the August contract ($1.44 per cwt below current levels) would signal additional long-term pressure and erase the entire market rally that was based on expected China demand due to African swine fever losses. Growing concerns about the ability to build export demand and reach a trade agreement with China are once again eroding market support. Pork prices continued to slide lower with triple-digit losses in butt, picnic and rib cuts. Pork cutout values fell $0.71 per cwt, moving to $76.73 per cwt on 255 loads. CME cash lean index for 6/19 is $79.55, up $0.06. DTN Projected lean index for 6/20 is $79.14, down $0.41.

MONDAY'S CASH HOG CALL: Steady to $1 lower. Continued pressure in cash and futures trade Friday is setting the tone for additional cash market weakness next week. Most bids are expected to be 50 cents lower, as packers secure end of the month needs. Monday slaughter numbers are expected at 477,000 head.

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

(AG)

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