GENERAL COMMENTS
Cash cattle activity remains quiet with limited interest developing in most areas. A few bids have started to develop in the North at $108 live basis and $175 dressed basis. This is well below asking prices of $115 and higher in the South, and $182 to $185 in the North. Active trade may be delayed until late in the week. The Fed Cattle Exchange Auction Wednesday listed a total of 225 head (only two lots set for 1 to 9 day delivery for Kansas, no other states had cattle listed), with zero actually sold, 225 head listed as unsold, and zero head listed as PO (Passed Offer). According to the closing report, the national hog base is $0.04 lower compared with the Prior Day settlement ($58.00 to $65.16) weighted average $64.73. The corn futures are higher in light activity. July futures were 3 cents higher Wednesday. The Dow Jones Index is 12 points lower with the Nasdaq up 31 points.
LIVE CATTLE
Strong midweek gains have developed across live cattle futures following uniform buyer support in nearby feeder cattle trade ($0.55 Higher to $2.15 Higher). Firm gains were seen in all markets with all but spot month June contracts holding triple-digit gains. There is growing support that buyers may be willing to focus on additional trade activity as they look to bounce back from last week's losses. Beef cut-outs: mixed, $0.82 lower (select, $205.04) and up $0.73 (choice, $230.08) with moderate demand and offerings (64 loads of choice cuts, 32 loads of select cuts, 18 load of trimmings, 26 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL:
Steady to $2 lower. Interest remains sluggish going into the last half of the week. If early bids are any indication of the market to come, packers are attempting to cut spending activity significantly. There remains a wide gap between asking prices and the few bids that developed. This could start to weaken the overall tone of the market despite the firm futures trade activity seen Wednesday.
FEEDER CATTLE:
Strong triple-digit gains in nearby contracts helped spark underlying strong buyer activity in all cattle futures trade ($0.95 to $2.65 higher). Traders quickly moved back into the feeder cattle trade following sluggish market moves Tuesday. This spark of interest in the complex has helped draw additional buyer support back to the table with August contracts leading the complex higher with a $2.65 per cwt gain. The potential to draw even more underlying support back into summer contracts has widened the price premium in August futures over the May contract, currently nearing $10 per cwt. CME cash feeder index for 5/22 is $133.43 up $0.02.
LEAN HOGS:
Triple-digit gains quickly developed Wednesday morning with increased overall buyer support moving into the market. ($0.80 to $1.47 higher) The pressure earlier in the week quickly opened up the opportunity to draw additional buyer support back into the market. There is growing uncertainty as to just how much additional support will develop through the rest of the week with little fundamental or technical changes expected. The bounce off of recent market lows could help draw some follow through support, but the overall tone of the market remains weak. Pork prices tumbled lower midweek with firm triple-digit pressure developing in several primal cuts. Pork cut-out: $74.81 down $1.33. CME cash lean index for 5/21 $68.69 up $0.29. DTN Projected lean index for 5/22 $69.03 up $0.34.
THURSDAY'S CASH HOG CALL:
Steady to 50 cents higher. Bids early Thursday morning are expected to fall in the similar range seen earlier in the week. The focus on seasonal market tightness may help draw additional price support back into the market through the end of the week. Total slaughter numbers Thursday are expected to be 460,000 head. Saturday runs are likely to be seen near 30,000 head.
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