DTN Midday Livestock Comments          06/18 11:53

   Early Gains Soften as Volume Increases 

   Triple-digit gains seen early Tuesday morning have eroded through the 
session, although the tone of the market remains firm with limited gains 
holding across the complex. Markets are expected to hold prices in current 
ranges through the rest of Tuesday.

By Rick Kment
DTN Analyst

General Comments

   Narrow gains are seen in most live cattle and lean hog futures trade midday 
Tuesday as traders back away from initial support. The focus has moved to 
potential market stability through the week. This may spark some additional 
underlying gains over through the end of the week, although afternoon trade is 
expected to remain sluggish. Corn futures are lower in moderate trade. July 
corn futures are 7 cents lower. Stock markets are higher in light trade. Dow 
Jones is 360 points higher with NASDAQ up 121 points. 

   LIVE CATTLE:

   Initial gains have slowly eroded through the morning as traders try to 
balance the recent market support with longer-term market direction as nearby 
contracts are hovering in a narrowly mixed trading range. The overall lack of 
support in the complex has more to do with trader apathy midday Tuesday than 
any fundamental or technical market shifts. June and August futures have 
trickled to narrow losses, although the underlying tone of the market seems to 
be firming based on traders defending recent support levels and focusing on 
long-term demand support through the entire beef complex. Bids have quickly 
developed Tuesday morning at $109 live and $175 per cwt dressed. This is well 
below asking prices of $112 to $115 live and $185 and higher dressed. At this 
point there seems very little urgency in getting deals done, which will likely 
push actual trade off until Wednesday or later. Boxed Beef cut-outs at midday 
are mixed, $0.49 higher (select) and down $0.03 per cwt (choice) with light 
movement of 69 total loads reported (30 loads of choice cuts, 19 loads of 
select cuts, 4 loads of trimmings, 16 loads of ground beef).

   FEEDER CATTLE:

   Active buyer support quickly moved into feeder cattle trade early Tuesday 
morning, as the focus on corn price stability helped to solidify recent gains. 
Prices have eased through the morning, but buyers remain firmly focused on 
building long-term market support based on potential stability in feed costs. 
August through November contracts are all trading at $137 per cwt, eliminating 
any sense of price premium in nearby contract months. The flat market structure 
is creating some concern that could allow increased market interest in 
fourth-quarter trade without price penalty and limited volume in summer and 
fall contract months.

   LEAN HOGS: 

   Mixed trade is seen late morning Tuesday following initial strong gains 
slipping away during morning trade. July and August futures have posted 
moderate to firm losses at midday with lightly traded July contracts leading 
the renewed weakness with a 97-cent loss. Although deferred futures are holding 
moderate support, gains are limited to 20 to 40 cents per cwt. The fact that 
renewed buying interest is being limited is causing concern that additional 
softness may develop through the rest of the week. Cash prices are lower on the 
National Direct morning cash hog report. The weighted average price is down 
$1.37 at $74.77 per cwt with the range from $67 to $76 on 2,815 head reported 
sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota 
Direct morning cash hog report. Pork values posted strong gains as aggressive 
gains in belly cuts offset triple digit losses in rib primals. Pork cutouts 
added $1.64 per cwt at $84.61 per cwt with 216 loads traded. Lean hog index for 
6/14 is $79.27, down 0.16, with a projected two-day index is unavailable due to 
delays.

   Rick Kment can be reached at rick.kment@dtn.com 


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