Sharp losses once again quickly developed across feeder cattle and lean hog trade with increased selling pressure following the renewed surge in grain trade. Corn futures are higher in moderate trade. July corn futures are 12 1/4 cents higher. Stock markets are higher in light trade. Dow Jones is 2 points higher with NASDAQ up 11 points.
LIVE CATTLE:
Live cattle futures have given back early gains following a strong shift lower in feeder cattle trade once again. Lightly traded June contracts are still holding a 5 cent gain, although the rest of the complex is trading consistently lower with losses of 27 to 50 cents per cwt at midday. The underlying pressure is driven by sharply higher corn market prices with traders not only concerned about the amount of corn that is not yet, or may not get planted. But late planting traditionally lowers yield on acres that do get planted. This will dramatically affect production costs of beef through the next year. Cash cattle trade has not yet been seen Thursday morning, although scattered bids are available in most areas. Live trade in the South on Wednesday developed at $115 per cwt. This is generally steady with last week and could set the tone for the market, despite the underlying pressure in futures trade. Bids are seen at $115 to $116 live and $185 to $186 dressed. Asking prices are holding firm at $117 to $118 live and $188 and higher dressed. Boxed Beef cut-outs at midday are lower, $0.58 lower (select) and down $0.13 per cwt (choice) with light movement of 89 total loads reported (40 loads of choice cuts, 16 loads of select cuts, 3 loads of trimmings, 30 loads of ground beef).
FEEDER CATTLE:
Feeder cattle markets have responded to the aggressive double-digit gains in corn prices Thursday morning by posting sharp triple digit losses in all contracts. August and September contracts are most affected due to the immediate impact that rising feed costs have on spot-month futures. Each of these contracts are posting $2 per cwt losses as increased underlying pressure is seen across the complex. The expectation that additional pressure will develop is not only going to affect futures trade, but will be carried through cash feeder cattle prices through the end of the month and well into June. This aggressive pressure continues to set contract lows in all contracts.
LEAN HOGS:
Lean hog futures remain lower at midday. Although nearby contracts have pulled back from sharp initial losses reaching $2 per cwt, the focus on market unrest exists as the one day bounce in prices seen Wednesday is becoming a distant memory. Traders continue to remain extremely concerned about the trade relationship with China, which initially sparked the spring market rally due to expectations that trade would quickly develop. But the further the process moves along, the harder it is to see a positive short-term resolution as traders continue to back away from April highs and struggle with the potential that domestic supply may continue to be contained by current pork demand. The volatility of pork cutouts over the last few days is adding even more uncertainty to the complex at a time when seasonal support is typically developing in products like ribs and bacon. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.07 at $75.33 per cwt with the range from $71.00 to $77.00 on 3,116 head reported sold. Cash prices unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values posted sharp losses following a $17.09 loss in belly cuts. Pork cutouts fell $2.39 per cwt at $82.09 per cwt with 171 loads traded. Lean hog index for 5/28 is $82.56, down 0.75, with a projected two-day index at $82.22, down 0.34.
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