DTN Midday Livestock Comments 05/25 11:28
Midweek Point Brings Ample Support to Livestock Contracts
The cash cattle market has yet to see any trade develop for the day, and
given that only a small handful of cattle traded Tuesday afternoon, the market
needs to see some business get underway.
DTN Livestock Analyst
Thus far, it's been a rather supportive and encouraging day for the
livestock sector. The live cattle and feeder cattle contracts are trading
higher, as the corn market works its way lower, and feedlots are anxiously
sitting around waiting for a bid. Meanwhile, the nearby lean hog contracts are
trading higher as the market found support Tuesday afternoon with a higher cash
market and stronger pork cutout values. July corn is down 7 1/2 cents per
bushel and July soybean meal is down $6.40. The Dow Jones Industrial Average is
up 47.33 points.
The live cattle contracts are again trading higher as the market finds ample
technical support and likes to see that processing speeds are keeping with
their vigorous pace, and that boxed beef demand has grown firmer. June live
cattle are up $0.20 at $132.92, August live cattle are up $0.12 at $132.87 and
October feeder cattle are up $0.05 at $138.67. Given that the market is far
from resistance, its upward potential isn't limited so long as the fundamental
side of the market holds somewhat steady. The country saw a little bit of
business develop Tuesday afternoon but largely the market has still yet to
trade for the week. Asking prices for the day are noted at $138-plus in the
South and $226-plus in the North, and bids of $222 to $224 are being offered in
Nebraska but otherwise the market is quiet.
Boxed beef prices are mixed: choice down $0.35 ($263.30) and select up $0.29
($245.64) with a movement of 54 loads (35.65 loads of choice, 10.41 loads of
select, zero loads of trim and 7.49 loads of ground beef).
As the corn market continues to cascade lower, the feeder cattle contracts
are pushing a modest rally as the day finds support from weaker inputs and
modest support from the live cattle market. August feeders are up $0.50 at
$168.70, September feeders are up $0.55 at $171.62 and October feeders are up
$0.80 at $174.27. So much of the feeder cattle market's outcome depends on the
corn market right now. Yes, the country needs rain, yes, the market needs to
see strong consumer demand, but with cost of gains already historically high --
feeder cattle buyers are glued to the corn market as it dictates what they can
afford to pay for feeders. Given that early summer sales are about to begin in
a month, everyone is scrambling to get a gauge on what feeder cattle prices
could be this year.
After rounding out lower Tuesday afternoon, the nearby lean hog contracts
are back to rallying modestly while the deferred months aren't so optimistic.
June lean hogs are up $0.40 at $109.42, July lean hogs are up $0.27 at $109.30
and August lean hogs are up $0.07 at $109.10. The hog market is relying on
unanimous support in order to keep its market trending higher. So, on Monday
afternoon, when pork cutout values closed lower and cash prices saw little
interest, Tuesday's market was cautious as it needed to see better support.
Thankfully, by Tuesday's end, the market was again supported by the cash market
and by pork cutout values. Come Wednesday, traders are back to working the
front months higher. Much of Thursday's outcome will depend on how trade
handles itself this afternoon.
The projected lean hog index for May 24 is up $0.84 at $103.88, and the
actual index for May 23 is up $0.96 at $103.04. Hog prices are higher on the
Daily Direct Morning Hog Report, up $0.57 with a weighted average of $111.96,
ranging from $100.00 to $116.50 on 7,414 head and a five-day rolling average of
$111.48. Pork cutouts total 141.83 loads with 132.25 loads of pork cuts and
9.58 loads of trim. Pork cutout values: down $1.06, $107.18.
ShayLe Stewart can be reached firstname.lastname@example.org
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