GENERAL COMMENTS: Live cattle and lean hog futures saw strong support early Tuesday, but pressure developed in nearby contracts later in the day as traders covered positions. A pullback in grain futures helped spark interest in feeder cattle and led to strong gains in deferred live cattle and hog futures. Cash cattle trade remains undeveloped Tuesday afternoon with only limited bids. Bids are seen at $109 live and $175 dressed. Asking prices are still well above these levels at $112 to $115 live and $185 and higher dressed. It is uncertain if trade will develop Wednesday, or if feeders will hold out until later in the week. The National Daily Direct afternoon hog report was $0.46 lower ($67-$78 per cwt, weighted average $75.68) on 15,735 head sold. Corn futures shifted lower Tuesday with July down 5 cents per bushel. The Dow Jones Index was 353 points higher with the NASDAQ up 108 points.
LIVE CATTLE: Limited trade volume in nearby live cattle futures led to a mixed close of $0.07 lower to $0.87 higher. The June contract closed unchanged despite limited activity in spot-market trade. Even though the most active trade remains in August and October futures, the focus on price premium in the June contracts is causing some additional uncertainty. Firm support in feeder cattle trade helped to bring more support to deferred live cattle futures. However, prices remain entrenched in the current trading range with limited direction expected on either side of this range. The sluggish moves in beef values and stable demand are limiting upside moves, while recent market pressure and escalating production costs are curbing significant downside moves. Beef cut-outs: lower, down $0.71 (select, $201.80) to down $1.29 (choice, $220.53) with light demand and moderate offerings, 137 loads (66 loads of choice cuts, 39 loads of select cuts, 9 loads of trimmings, 23 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL: Steady. Packer interest is expected to become more aggressive midweek, although initial bids are likely to remain in the same range as seen Tuesday. Active trade may be delayed until late in the week.
FEEDER CATTLE: Feeder cattle saw firm gains on lower corn futures Tuesday. Futures settled $0.32 to $1.05 higher. Nearby futures closed 32 to 55 cents per cwt higher. All 2019 contracts are trading at $137 per cwt, leaving little incentive for traders to aggressively roll into deferred futures, given the flat market structure. The lack of price direction is creating concern, but with wild shifts in grain trade and uncertainty about long-term feed costs, traders remain extremely cautious through the summer months. CME cash feeder index for 6/17 is unreported at this time.
LEAN HOGS: Mixed trade developed in lean hogs later Tuesday as buyers backed away from initial support. Futures closed mixed in a wide range from $1.57 lower to $1.07 higher. Buyer interest was focused on deferred contracts as traders sought to expand early week gains. Late-day pressure developed in July through October futures as short-term bearishness continued to limit upside potential. The July contract is once again testing long-term support, ending Tuesday's session just 12 cents above Friday's close. Moderate gains developed in 2020 contract months, but the lack of consistency through the market could lead to moderate-to-wide price swings through the end of the week. Pork prices tumbled lower on strong pressure in rib cuts. Pork cutout values fell $1.82 per cwt, moving to $81.15 per cwt on 410 loads. CME cash lean index for 6/14 is $79.27, down $0.19. DTN Projected lean index for 6/17 is $79.26, down $0.01.
WEDNESDAY'S CASH HOG CALL: Steady to $1 lower. Limited price direction is expected midweek as the recent support in futures trade is helping to firm cash trade. Bids are still offered steady to lower, although most bids are likely to be steady midweek. Wednesday slaughter numbers are expected at 477,000 head. Saturday runs are expected at 85,000 head.
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