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DTN Midday Livestock Comments          05/21 12:06

   Midday Pressure Develops Tuesday

   Firm pressure quickly moved through feeder cattle and lean hog trade Tuesday 
morning as traders focus more on feed costs associated with elevated grain 
trade. Firm follow through pressure is expected through the rest of the Tuesday 
session. 

By Rick Kment
DTN Analyst

General Comments

   Early morning market stability seen through the livestock complex has 
quickly eroded with triple-digit losses developing in feeder cattle and lean 
hog trade. Concern surrounding export trade of pork is being met with increased 
grain prices based on crop size uncertainty. Corn futures are higher in 
moderate trade. July corn futures are 7 1/2 cents higher. Stock markets are 
higher in light trade. Dow Jones is 140 points higher with Nasdaq up 83 points. 

   LIVE CATTLE:

   Initial mixed trade in live cattle futures has quickly turned lower with 
traders focusing on triple-digit losses redeveloping in feeder cattle futures. 
The focus on increased feed costs and uncertainty about overall feed supplies 
at the end of the year is causing concern through the entire livestock market 
based on production cost uncertainty. If feed prices remain uncontracted, it is 
going to remain extremely difficult to estimate and manage overall cost of 
gains for cattle in feedlots as well as estimating break-even prices for feeder 
cattle. This will likely create additional market pressure over the near future 
with overall crop size uncertainty likely to be a major topic through the 
entire year. Cash cattle markets are quiet with bids and asking prices 
undeveloped at this point. It is expected to be midweek or later before any 
significant interest or sales are seen. Boxed Beef cut-outs at midday are 
lower, $1.08 lower (select) and down $0.33 per cwt (choice) with light movement 
of 62 total loads reported (31 loads of choice cuts, 16 loads of select cuts, 6 
loads of trimmings, 9 loads of ground beef).

   FEEDER CATTLE:

   Strong pressure has moved into feeder cattle trade midmorning as increased 
focus on feed costs is eroding futures trade. Cash markets are expected to be 
directly impacted by higher corn prices. The Oklahoma City feeder cattle market 
is expected to show cash market pressure, which would likely add increased 
softness through the end of the week. August futures are trading $2.15 per cwt 
lower midday with the potential for lack of firm support in live cattle trade 
and continued corn gains to retest contract lows before the end of the week.

   LEAN HOGS: 

   Active pressure is developing in nearby lean hog trade following general 
market apathy through most of the market. June through August futures are 
holding triple-digit losses based on general market softness as traders seem to 
be once again focusing on the inability to gain access to the China pork 
market. Although the focus on increased global demand continues to keep markets 
generally supported, recent news stories focusing on the tighter supplies of 
pork pushing world prices is causing some nervousness that the increased price 
levels will affect domestic demand. The strong domestic demand seen through 
early 2019 is critical in additional support of the entire hog complex. Cash 
prices are lower on the National Direct morning cash hog report. The weighted 
average price is down $0.28 at $81.18 per cwt with the range from $72.00 to 
$83.00 on 4,872 head reported sold. Cash prices are higher on the 
Iowa/Minnesota Direct morning cash hog report. The weighted average price is up 
$0.60 at $82.50 per cwt with the range from $72.00 to $83.00 on 1,891 head 
reported sold. Pork values trickled higher with a widely mixed range seen in 
primal cuts. Pork cutouts added $0.32 per cwt at $86.85 per cwt with 185 loads 
traded. Lean hog index for 5/17 is $84.59, unchanged, with a projected two-day 
index at $84.37, down 0.22.

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


(CZ)

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