Early support in cattle trade was quickly eroded following lower than expected corn carryout expectations in the morning USDA crop report. This quickly pulled buyers away from the live cattle and feeder cattle complex. Hog futures continue to erode with sharp losses developing midday Tuesday. Corn futures are higher in moderate trade. July corn futures are 10 1/4 cents higher. Stock markets are lower in light trade. Dow Jones is 9 points lower with NASDAQ down 6 points.
LIVE CATTLE:
Strong pressure quickly moved into live cattle trade following a surge in corn markets midday Tuesday. The June USDA crop report posted significant shifts lower in ending stocks, which is bearish for livestock trade due to expected higher production costs. The focus across the market followed a 10 cent rally in corn prices just after the report release. Live cattle futures struggled to maintain early support, quickly shifting lower as traders try to adjust to the reality that not only production levels will increase, but feed supplies will remain tighter through the next year. This could continue to create uncertainty through the entire cattle market. Cash cattle interest remains sluggish with bids and asking prices not yet fully established. The wide swing in futures prices may delay activity until midweek or later. Boxed Beef cut-outs at midday are mixed, $0.12 lower (select) and up $0.76 per cwt (choice) with light movement of 59 total loads reported (36 loads of choice cuts, 14 loads of select cuts, no loads of trimmings, 9 loads of ground beef).
FEEDER CATTLE:
Firm underlying pressure is moving through feeder cattle trade as traders grapple with additional production costs following a double digit rally in corn prices after the USDA crop report release. The focus on higher production costs and continued beef supply levels have quickly turned prices from moderately higher to actively lower over the last couple hours. This could lead to additional underlying pressure over the near future, holding current triple-digit losses through the end of the session.
LEAN HOGS:
Moderate to strong losses have developed Tuesday morning with active pressure quickly increasing following the rally in corn prices following the morning USDA report. The potential for additional strong market pressure exists, which could lead to limit losses by the end of the session. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.89 at $75.59 per cwt with the range from $67.00 to $77.00 on 4,940 head reported sold. Cash prices are unreported on the Iowa/Minnesota Direct morning cash hog report. Pork values firmed on steady to strong primal cuts. Pork cutouts added $1.46 per cwt at $85.52 per cwt with 221 loads traded. Lean hog index for 6/7 is $79.95, down 0.35, with a projected two-day index is unreported at this time.
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