DTN Midday Livestock Comments          05/16 11:40

   Higher Corn Keeps Feeder Cattle at Bay

   High corn prices are keeping the feeder cattle market from rallying like the 
live cattle and lean hog markets.

ShayLe Stewart
DTN Livestock Analyst

GENERAL COMMENTS:

   The live cattle and lean hog contracts are leaning full steam ahead into 
Monday's market as traders willingly support their cause, but the feeder cattle 
market can't get past the corn market's $0.12 to $0.19 advancement. 
Nevertheless, watching both beef and pork meat prices close this afternoon will 
be telling and influential in how Tuesday's market preforms. July corn is up 20 
1/4 cents per bushel and July soybean meal is up $2.60. The Dow Jones 
Industrial Average is down 8.92 points.

LIVE CATTLE:

   The live cattle market is trading with ample support into Monday's 
afternoon, but that doesn't mean that the week is free of answering any hard 
questions. With packers having ample supplies of cattle committed to them 
already for this week and the weeks ahead, the cash cattle market could be left 
high and dry this week. And along with monitoring cash prices, watching how 
packers manage processing speeds in the weeks ahead will be critical as well. 
If packers begin to slow down production because they've been seeing hit/miss 
demand at the meat counter, then feedlots could be in for a long summer as 
packers could lackadaisically work their way through the market's record number 
of cattle on feed. June live cattle are up $1.10 at $133.17, August live cattle 
are up $1.50 at $133.85 and October live cattle are up $0.60 at $139.72. 
Packers were more aggressive in last week's cash market than anticipated given 
that they've bought over 300,000 head of cattle in the cash market in the last 
month, but still, it's important to note that packers are continuing to pad 
their deferred delivery commitments.

   Last week's negotiated cash cattle trade totaled 90,683 head. Of that 73% 
(66,368 head) were committed for the nearby delivery, and the remaining 27% 
(24,315 head) were committee for the deferred delivery.

   Boxed beef prices are higher: choice up $1.87 ($260.82) and select unchanged 
($243.90) with a movement of 34 loads (13.35 loads of choice, 7.16 loads of 
select, zero loads of trim and 13.02 loads of ground beef).

FEEDER CATTLE:

   It's been a tough day to start out the week for the feeder cattle contracts 
as the market looks at corn prices rallying $0.12 to $0.19 in their nearby 
contracts. With the live cattle market uneasy about its nearby trajectory, the 
feeder cattle complex is on its own for either championing higher trade or 
digging its hole to a deeper demise. August feeders are down $0.92 at $167.10, 
September feeders are down $1.05 at $169.62 and October feeders are down $1.07 
at $171.97.

LEAN HOGS:

   As the lean hog contracts push full steam ahead into Monday's market, the 
complex is seeing tremendous support, despite the market's questionable future. 
June lean hogs are up $3.12 at $103.85, July lean hogs are up $3.77 at $104.97 
and August lean hogs are up $3.17 at $104.62. In order to keep this upward 
momentum, the market will need to see strong processing speeds as well as a 
supportive close in pork cutout values. If the market can indeed achieve these 
factors, then Tuesday stands a chance at keeping the market's positive tone, 
but if not than the market may begin to fill in the gap between Friday's close 
and Mondays open.

   The projected lean hog index for May 13 is down $0.42 at $100.07, and the 
actual index for May 12 is up $0.55 at $100.49. Hog prices are higher on the 
Daily Direct Morning Hog Report, up $0.04 with a weighted average of $101.31, 
ranging from $98.00 to $107.00 on 2,863 head and a five-day rolling average of 
$104.96. Pork cutouts total 202.69 loads with 167.78 loads of pork cuts and 
34.91 loads of trim. Pork cutout values: up $1.96, $103.13.

   ShayLe Stewart can be reached shayle.stewart@dtn.com




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