GENERAL COMMENTS: Sharp losses swept through cattle trade Thursday with feeder cattle futures falling limit lower in late-day trade. The continued weakness in feeder cattle trade and uncertainty about corn supplies sparked additional pressure in live cattle futures. Hog futures closed mixed Thursday after regaining limited support from morning losses. Light-to-moderate trade has developed through the South at $115 per cwt. This is steady with Wednesday's price levels and generally steady with last week. A few deals were seen in the North on a live basis with prices $116 per cwt also steady. Bids are seen at $185 to $186 dressed through the North, although limited activity is seen at this point. There is talk about a few deals for delayed delivery developing at $186 per cwt through late afternoon. Asking prices remain firm at $117 dressed and $188 live despite the sharp futures losses. The National Daily Direct afternoon hog report was unreported at this time due to delays. Corn futures surged higher in active trade with July up 17 cents per bushel. The Dow Jones Index was 43 points higher with the NASDAQ up 20 points.
LIVE CATTLE: Cattle futures tumbled lower in late-day trade, closing $2.20 to $2.80 lower. Despite moderate gains in the complex early Thursday, traders backed away through the last half of the session. Feeder cattle quickly turned sharply lower based on continued buying in grain trade, which pushed corn and soybean prices 17 cents per bushel higher. This shift lower quickly sparked active selling in all live cattle trade, with the August futures contract limit down at one point Thursday afternoon. Although markets were able to move back from limit losses at closing bell, concerns remain about additional losses through the next couple of week. The August futures tested contract lows Thursday afternoon, with a move below that level in upcoming sessions likely to lead to active liquidation and further market losses. The higher corn and feed prices are causing much more concern than just higher feed prices, which traditionally support deferred futures trade. Current planting delays and growing conditions are causing uncertainty about grain price projections as well as short- and long-term feed supplies. Beef cut-outs: mixed, down $1.12 (select, $208.87) to up $0.05 (choice, $223.58) with good demand and moderate offerings, 154 loads (77 loads of choice cuts, 25 loads of select cuts, 16 loads of trimmings, 35 loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL: Steady. Additional trade seen Thursday at $115 in the South and $116 live in the North further establishes the tone of steady cash prices. Trade in the South may be wrapped up for the week, but additional business may develop in the North. It is uncertain if the freefalling futures trade will spark panic cash selling at the end of the week, allowing for lower price levels Friday.
FEEDER CATTLE: Further weakness continued in feeder cattle trade Thursday following active gains in grain trade. Futures closed $3.07 to $4.50 lower. Nearby feeder cattle futures tumbled to limit losses as aggressive liquidation moved through the complex following double-digit gains in grain futures. The feeder cattle complex was already weakened over the last six weeks by increased placement levels over the past two months sparking additional supply concerns. But planting delays that have caused corn and soybean prices to surge higher through the end of May have left the complex with little to no stability. This is causing traders to liquidate positions due to uncertainty of feed costs and the impact this will have on beef values through the next several months. CME cash feeder index for 5/29 is $135.00, down $1.65.
LEAN HOGS: Aggressive pressure quickly moved into the lean hog complex on outside market concerns. Futures closed mixed, $1.52 lower to $0.20 higher. The strong support seen Wednesday quickly evaporated as traders moved back into the complex and gains swept through the grain trade. The concern about higher feed prices is just another item added to the list of concerns in the hog complex. The lightly traded June contract maintained triple-digit losses, while the rest of the complex steadily regained limited support through the end of the session. Following extremely wide price shifts over the last two weeks, traders seem to be focusing on squaring positions at the end of the month, while still eyeing downside market potential through early June on global market concerns. Pork cutouts are unreported at this time due to reporting delays. CME cash lean index for 5/28 is $82.56, down $0.75. DTN Projected lean index for 5/29 is $82.22, down $0.34.
FRIDAY'S CASH HOG CALL: Steady to $2 lower. Additional pressure is expected through the cash hog market Friday following lighter procurement runs earlier in the week due to mechanical issues. This will further limit the need to secure additional hogs through the end of the week. Friday's slaughter is expected at 470,000 head. Saturday runs are expected at 250,000 head.
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