Tuesday Closing Livestock Market Summary

GENERAL COMMENTS

Cash cattle are still silent with bids and asking prices unreported on either side at this point of the afternoon. The fact that packers and feedlot managers are playing coy ahead of the Memorial Day holiday weekend is likely pointing to the fact that either many expect it will be a very late-week affair or that business will be done quickly and efficiently once bids and offers do come to the table later in the week. Trade will be delayed until the second half of the week sometime, but most would likely desire it to be earlier than later. According to the closing report, the national hog base is unreported due to confidentiality. The corn futures moved lower in light activity. July futures were 5 cents Lower Tuesday. The Dow Jones Index is 44 points higher with the Nasdaq up 3 points.

LIVE CATTLE

Live cattle futures quickly liquidated positions following early week support, based on pressure in nearby contracts (steady to $0.85 lower). June live cattle futures slipped lower, falling 85 cents per cwt and closed at $123.07 per cwt. Even though the pressure Tuesday was not able to take out the weekly low, the concern that additional follow-through pressure through the next couple of trading sessions and eroding beef market fundamentals could bring about further market pressure will break the June contracts below the $122 per cwt price levels and create additional long-term liquidation. Beef cut-outs: lower, $1.66 lower (select, $221.17) to down 2.14 (choice, $245.74) with light demand and moderate offerings (60 loads of choice cuts, 50 loads of select cuts, 13 loads of trimmings, 20 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to 2 lower. Activity through the cattle market remained at a complete standstill through the day Tuesday with bids and asking prices still undeveloped. Packers are unlikely to become overly aggressive early in the week with active trade likely to be delayed until sometime Thursday or Friday, although at this point both sides would likely try to get business done before Friday afternoon in order to enjoy a long holiday weekend. The lack of support in the futures trade is limiting optimism of market support and pointing to follow-through pressure once again at the end of the month.

FEEDER CATTLE

Feeder cattle futures closed mostly lower as strong market pressure developed in most contract months ($1.27 lower to $1.15 higher). Early mixed pressure in the complex left the feeder cattle market vulnerable following strong early week support that was unable to redevelop early Tuesday morning. This sparked some seller pressure through the morning Tuesday and quickly led to liquidation across the entire cattle complex. Even though May futures remain unchanged in quiet trade due to inactivity, August futures led the market lower with a $1.27 per cwt loss as traders continue to back away from market support near $153 per cwt. CME cash feeder index: 5/22: $143.27, up $0.39.

LEAN HOGS

Lean hog futures closed mostly higher following strong nearby support ($0.02 lower to $0.80 higher). Firm buyer support developed in summer contracts as prices quickly moved past the $80-per-cwt price levels and traders continue to move back into the market as prices have broken through resistance levels, which is creating additional market interest through all nearby contracts. Carcass values are firmly higher. Firm losses in loins were quickly overshadowed by strong gains in all other primals. Pork cut-out: $90.30 up $1.59. CME cash lean index for 5/19: $75.89, up $0.34. DTN Projected lean index for 5/22: $75.94, up $0.05. 

WEDNESDAY'S CASH HOG CALL

Steady to $1 lower. Packers continue to focus on follow-through pressure Tuesday despite the firm gains in futures trade and strong gains developing in pork values Tuesday. The potential for market support at the end of the month has very little to do with the lack of support in the cash market due to light buyer activity. Most cash hog prices are expected to remain steady midweek even though the full range is pointing lower. Wednesday runs are expected to reach 442,000 head as Saturday levels are likely to approach 3,500 head.