DTN Midday Livestock Comments 05/21 12:06

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) Copyright 2019 DTN/The Progressive Farmer. All rights reserved.