GENERAL COMMENTS: Hog futures rallied Wednesday as renewed buyer interest flooded the market at the beginning of May. Most nearby contracts closed with limit gains of $3 per cwt. Cattle futures, on the other hand, closed mixed following bearish fundamental moves in cash and beef values. Feeder cattle trade was also negatively affected by late-day corn buying. Light-to-moderate cash trade was developing in Nebraska at $200 per cwt. This is generally $5 per cwt lower than last week, following the weaker trend seen in the South with the few cattle that sold late Tuesday. Bids are still holding in parts of the South at $123 per cwt, steady with early week trade, but well below last week's levels. Although some additional trade is likely to develop through the end of the week, the tone has been set, which may limit cattle movement over the next couple of days. The National Daily Direct afternoon hog report was $0.01 higher ($72-$83, weighted average $80.46) on 11,844 head sold. Corn futures were higher in light trade with July up 6 cents per bushel. The Dow Jones Index was 167 points lower with Nasdaq down 45 points.
LIVE CATTLE: Live cattle futures closed $0.22 to $0.80 lower following weaker beef values and eroding cash trade. Support that was seen in the complex Monday evaporated Wednesday on indications of weaker cash cattle trade and eroding feeder cattle markets. Additional pressure developed late in the session when corn prices moved from fractional gains to a strong market rally. The June futures contract closed below $114 per cwt for the first time since early December. August led the complex lower, falling below $111 per cwt. Concerns about follow-through liquidation by both noncommercial and commercial traders is adding to the softness in the complex. Total open interest has fallen nearly 40,000 contracts in the last couple of weeks, sparking concerns of a further widespread exodus from the cattle market as prices distance themselves from recent market highs. Beef cut-outs: lower, down $0.71 (select, $217.50) to down $1.62 (choice, $230.22) with light demand and moderate offerings, 164 loads (91 loads of choice cuts, 29 loads of select cuts, 14 load of trimmings, 30 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL: Steady with Wednesday's levels. Following light-to-moderate trade in several areas Tuesday and Wednesday, it is expected that any additional trade will be within the same price range of $123 live and $200 per cwt dressed.
FEEDER CATTLE: Initial buyer support struggled to gain momentum, allowing for late-day pressure in feeder cattle. Futures closed mixed, $0.57 lower to $0.07 higher. Active buyer support initially moved into feeder cattle trade following the rolling of the calendar to May, but quickly ran out of gas, allowing all but the August contract to close moderately lower. Continued pressure in live cattle trade is adding to the lack of support in feeder cattle futures, which are once again testing long-term support levels. CME cash feeder index for 4/30 is $144.63, down $0.03.
LEAN HOGS: Strong gains quickly swept through hog futures as buyers returned on May 1. Futures settled $0.42 to $3.00 higher. The aggressive turnaround in lean hogs had more to do with trade volume increasing following the conclusion of April rather than any specific fundamental or technical reason. A lack of market interest early Wednesday and sluggish moves lower left a significant price vacuum. This sparked aggressive midday support, which pushed prices limit higher in most nearby contracts. Traders are focusing on the potential for a trade deal with China to still develop and on expectations for a strong export sales report Thursday. Ultimately, continued volatility is still well rooted in lean hog futures, and markets could swing widely in either direction at the drop of a hat. Pork cutouts slipped lower following mixed primal markets. Pork cutout values fell $0.23 per cwt, moving to $81.99 per cwt on 280 loads. CME cash lean index for 4/29 is $83.27, down $0.19. DTN Projected lean index for 4/30 is unavailable at this time.
THURSDAY'S CASH HOG CALL: Steady to $1 lower. Packers will continue to aggressively push bids lower through the end of the week despite renewed futures support. Most bids are likely to be steady to weak early Thursday morning. Thursday slaughter should be near at 475,000 head. Saturday runs are expected at 36,000 head.
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