GENERAL COMMENTS:
The livestock contracts may have had a tough start to the week, but come Wednesday, the contracts are back on their feet and trading higher. Both the lean hog and feeder cattle contracts are rallying substantially as their markets see adequate fundamental support. July corn is down 21 1/2 cents per bushel and July soybean meal is down $0.30. The Dow Jones Industrial Average is down 341.77 points.
LIVE CATTLE:
The live cattle market is keeping with a modest rally into Wednesday's afternoon as the futures market sees ample support. Meanwhile, the fundamentals of the live cattle market are mixed as midday boxes are lower for choice cuts but higher for select, and cash cattle prices are seeing more business develop in the South at $135, which is $2.00 lower than last week. June live cattle are up $1.72 at $132.25, August live cattle are up $2.22 at $132.60 and October live cattle are up $1.60 at $137.75. More business is expected to develop ahead of the day's close and will likely trickle into Thursday's trade too. This week's volume of cash cattle isn't expected to be much as packers will continue to rely on their deferred purchases as opposed to buying more cattle in the spot market.
Last week's negotiated cash cattle trade totaled 78,637 head. Of that 69% (54,361 head) were committed for the nearby delivery, while the remaining 31% (24,276 head) were committed for the deferred delivery.
Boxed beef prices are mixed: choice down $0.23 ($267.31) and select up $0.81 ($249.46) with a movement of 71 loads (46.52 loads of choice, 15.53 loads of select, zero loads of trim and 8.68 loads of ground beef).
FEEDER CATTLE:
After closing lower thanks to a weak commodity market Tuesday afternoon, the feeder cattle contracts have elected to rally and have wasted no time pushing a $3.00 advancement as corn trades lower yet again. August feeder cattle are up $3.72 at $168.85, September feeders are up $3.47 at $171.60 and October feeders are up $3.20 at $173.90. As the corn market steadily traded $0.23 to $0.25 lower throughout most of its contracts, feeders are seeming to have some weight lifted from their shoulders. The combination of weaker corn and moisture in parts of the West could turn sales in the countryside sharply higher this week.
LEAN HOGS:
With only two more weeks left for the June lean hog contract, the market is seeing more traders leave and find their way into the months of July and August. Regardless, the nearby months of June, July and August still hold a considerable premium above the deferred months as thin supplies of market ready hogs helps keep prices elevated. June lean hogs are up $1.52 at $109.50, July lean hogs are up $4.00 at $112.00 and August lean hogs are up $2.72 at $109.12. With both midday pork cutout values and cash prices seeing ample support, it's likely that the afternoon closes higher and if so, then the market stands a fair chance at rallying into Thursday's trade.
The projected lean hog index for May 31 is down $0.24 at $104.91, and the actual index for May 27 is up $0.22 at $105.15. Hog prices are higher on the Daily Direct Morning Hog Report, up $3.80 with a weighted average of $112.89, ranging from $100.00 to $117.00 on 7,641 head and a five-day rolling average of $111.09. Pork cutouts total 148.38 loads with 130.55 loads of pork cuts and 17.83 loads of trim. Pork cutout values: up $1.66, $109.37.
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