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DTN Midday Livestock Comments          05/23 11:42

   Hogs Trudge Higher to Start the Week

   As packers committed 44% of last week's purchases to the deferred delivery, 
this week's cash market will likely be pressured again as packers need to 
support the cash market is growing thinner.

ShayLe Stewart
DTN Livestock Analyst

GENERAL COMMENTS:

   With Monday's arrival, the support and ambition that carried the lean hog 
contracts higher last week has shown up once again. The cattle complex isn't as 
confident as the market sees mixed interest from traders and knows that its 
cash outcome is bleak. July corn is up 5 3/4 cents per bushel and July soybean 
meal is down $7.80. The Dow Jones Industrial Average is up 651.95 points.

LIVE CATTLE:

   The nearby contracts of June, August and October are trading higher, but the 
premiums in the deferred months are continuing to slip away in the live cattle 
market. June live cattle are up $0.75 at $132.32, August live cattle are up 
$0.35 at $131.90 and October live cattle are up $0.12 at $137.55. With 2022 
corn prices all trending above $7.30 per bushel, the cattle feeding business is 
continuing to be a challenge to pencil in, as inputs are bewildering. With last 
week's cash market committing 44% of its entire purchase for the deferred 
delivery (15 to 30 days out), this week's cash cattle market will be pressured 
again as showlists are growing and packers' need to support the cash market is 
continuing to wither away. Last week boxed beef prices did show an improvement 
from the week before, and moving ahead, monitoring beef slaughter and boxed 
beef prices will be incredibly important as it could be a signal how the weeks 
ahead will behave.

   Last week's negotiated cash cattle trade totaled 89,873 head. Of that, 56% 
(50,021 head) are committed for the nearby delivery, while the remaining 44% 
(39,852 head) are committed for the deferred delivery.

   Boxed beef prices are higher: choice up $1.53 ($263.70) and select up $2.16 
($245.18) with a movement of 67 loads (32.06 loads of choice, 10.54 loads of 
select, 4.63 loads of trim and 19.59 loads of ground beef).

FEEDER CATTLE:

   The feeder cattle contracts are posing a modest rally after last week's 
solid five-day trading regression. Given that the feeder cattle contracts have 
plummeted to new lows, the fact that the corn contracts are trading mildly 
higher isn't pressuring for the time being. The feeder cattle contracts aren't 
expected to recover much position as input costs are exuberant and the live 
cattle market is heading into June with record on feed numbers and the 
undeniable fact that cash prices are going to get cheaper. August feeders are 
up $0.12 at $164.05, September feeders are up $0.07 at $167.07 and October 
feeders are up $0.15 at $169.72.

LEAN HOGS:

   The lean hog market keeps trending higher as pork cut values show support 
again early in the week and traders are appearing more confident in pork demand 
as summer temperatures begin to favor the idea of grilling season. June lean 
hogs are up $1.10 at $109.97, July lean hogs are up $1.20 at $110.25 and August 
lean hogs are up $1.17 at $109.35. In order for the market to keep its upward 
trend, it's vital that pork cutout values continue to see support. There's a 
stark difference between the nearby market's reality and that of the deferred 
months. In the months of June, July and August, limited hog supplies and 
seasonal demand are expected to keep the market elevated, but come the later 
part of the year, supplies could become overwhelming and ultimately lead the 
market to lower price points.

   The projected lean hog index for May 20 is up $0.91 at $102.08 and the 
actual index for May 19 is up $0.80 at $101.17. Hog prices are unavailable on 
the Daily Direct Morning Hog Report due to confidentiality. However, we can see 
that 2,731 head have traded and that the five-day rolling average now sits at 
$109.06. Pork cutouts total 158.97 loads with 127.00 loads of pork cuts and 
31.97 loads of trim. Pork cutout values: up $0.71, $107.82.

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




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