DTN Midday Livestock Comments 05/11 11:43
Feeder Cattle and Corn Keep Going Rounds
The feeder cattle contracts were trying to keep their head above water and
stand their ground, but the corn market's rally simply grew to be too strong.
DTN Livestock Analyst
The livestock complex heads into Tuesday's afternoon mixed as the market has
support and pressure stemming from many different angles in the various
contracts. The biggest change since Monday's trade is that the corn market has
again decided that it's going to rally and has consequently sent feeder cattle
contracts tumbling lower. July corn is up 18 3/4 cents per bushel and July
soybean meal is up $7.10. The Dow Jones Industrial Average is down 491.62
points and NASDAQ is down 44.08 points.
Even though the feeder cattle contracts are diving lower, the live cattle
contracts are keeping their gains. If this type of encouragement continues, the
market may even be able to have a positive influence on this week's cash cattle
trade. June live cattle are up $0.07 at $118.30, August live cattle are up
$0.75 at $121.10 and October live cattle are up $0.90 at $125.45. The market
has every reason to trade higher with soaring beef prices, loyal consumers and
lots of room to trade before the market nears resistance again. The cash cattle
market has yet to test the waters this week and maybe, just maybe, feedlots
will have a chance at keeping prices at least steady if both the board and
boxes continue to trade higher. Asking prices in the South have been noted at
$120, and the North has yet to share their asking price.
Boxed beef prices are higher: choice up $2.84 ($311.95) and select up $2.59
($296.35) with a movement of 58 loads (35.18 loads of choice, 5.75 loads of
select, 3.63 loads of trim and 13.28 loads of ground beef).
Signing up to keep tabs on the feeder cattle market feels a lot like signing
up to test a never-ending roller coaster that has the biggest twists and turns
ever seen. Corn prices shoot higher, feeder cattle crash lower; corn prices
shoot lower, cattle scamper higher -- and the drastic nature of the changes is
never mild. Earlier Tuesday morning, the feeder cattle contracts were trying to
hold onto to the momentum that Monday's market successfully held, but as the
corn market quickly gained traction and jumped to $0.18 to $0.22 higher in the
nearby contracts, the feeder cattle market lost its gusto rather quickly. May
feeders are down $0.60 at $134.85, August feeders are down $0.17 at $148.50 and
September feeders are down $0.12 at $149.95.
The lean hog market is still scaling lower as traders are slow to enter the
market this week, but demand is roaring and it's showing through the market's
fundamentals. June lean hogs are down $0.87 at $111.22, July lean hogs are down
$1.27 at $111.42 and August lean hogs are down $1.30 at $106.80. With cash
prices up a significant $2.41 on nearly 6,000 hogs at only the midday report,
packers are back to buying up supplies and have intentions to run chain speeds
so long as they have the pork to process. Some may look at the boards doggish
trade and find it hard to believe that the market's fundamentals are doing one
thing while the market's technical sector does another, but we must remember
that when the prices get as lofty as they are, choppy up and down trade is
The projected lean hog index for May 10 is up $0.63 at $110.73, and the
actual index for May 7 is up $0.88 at $110.10. Hog prices are higher on the
National Direct Moring Hog Report, up $2.41 with a weighted average of $111.71,
ranging from $105.76 to $125.00 on 5,703 head and a five-day rolling average of
$111.65. Pork cutouts total 199.65 loads with 189.61 loads of pork cuts and
10.04 loads of trim. Pork cutout values: up $0.55, $113.71.
ShayLe Stewart can be reached email@example.com
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