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DTN Midday Livestock Comments          05/22 12:13

   Cattle Futures Surge Higher Monday 

   Feeder cattle futures quickly shift higher as traders adjust to the 
additional support moving into the market Monday. The expectation is that 
increased activity will continue to develop through the week as cash markets 
develop ahead of the holiday week. 

By Rick Kment
DTN Analyst


   Strong buyer support has quickly moved back into the live cattle and feeder 
cattle markets Monday morning. This support is quickly redeveloping the 
expectation that increased activity is seen in commodity markets and triple 
digit gains can spark the interest of commercial traders at the end of the 
month. Corn prices are higher in light trade. July corn futures are 3 cents 
higher. Stock markets are higher in light trade. The Dow Jones is 87 points 
higher while Nasdaq is up 40 points.


   Buying activity in the live cattle futures trade continues to move be driven 
by the feeder cattle complex. This support is currently driven by a $1 to $1.50 
per cwt rally in August through April contracts as markets firm through the 
complex. June futures have pulled away from session highs, but remain above 
$124 per cwt at midday. The ability to trade above $125 per cwt for a portion 
of the morning is bringing additional longer term commercial buyer support back 
to the market Monday morning. Cash cattle markets remain undeveloped following 
the lower cash markets last week with bids and asking prices unavailable early 
in the week. Show lists are smaller heading into the week as packers look for 
the upcoming holiday weekend of lighter procurement schedules to limit overall 
deliveries next week. This could limit overall movement and overall activity in 
many areas. Beef cut-outs at midday are higher, $1.09 Higher (select) and up 
$0.64 per cwt (choice) with light movement of 67 total loads reported (23 loads 
of choice cuts, 21 loads of select cuts, 15 loads of trimmings, 7 loads of 
ground beef). 


   Feeder cattle futures have posted an aggressive triple digit rally early 
Monday morning with traders building on the support seen Friday. Even though 
May futures remain sluggish, all other contracts have posted aggressive buyer 
support with August through October contracts holding gains between $2 to $2.50 
per cwt. There continues to be uncertainty if there will be increased volume 
moving into the market through the end of the day and if these prices will be 
able to hold through closing bell. Because many times strong gains at midday 
have quickly faded in the last few minutes of trade due to light trader volume. 
A bullish support through the week could spark renewed fundamental support and 
bring increased long-term support through the entire cattle market. 


   Lean hog futures remain mixed in light trade as trades continue to focus on 
light commercial buyer support slowly moving back into the lean hog complex. 
July and August futures are leading the market higher with a 30 to 50 cent gain 
holding the complex together although the focus on July contracts moving above 
$80 per cwt seems to be the highlight of the hog market Monday morning. The 
rest of the complex is unwilling to take a stand on which way to move as very 
little fundamental direction is developing early in the week. Cash prices are 
lower on the National Direct morning cash hog report. The weighted average 
price lost $0.67 at $70.17 per cwt with the range from $69.00 to $71.00 on 
3,128 head reported sold. Cash prices are lower on the Iowa Minnesota Direct 
morning cash hog report. The weighted average price lost $1.05 at $70.29 per 
cwt with the range from $69.00 to $71.00 on 348 head reported sold. The 
National Pork Plant Report reported 110 loads selling with prices adding 0.57 
per cwt. Lean hog index for 5/19 is at $75.55 up $0.63 with a projected two-day 
index of $75.89 down $0.34. 

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


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