DTN Midday Livestock Comments          06/19 11:55

   Hog Post Gains on Trade Hopes 

   Lean hog futures remain firmly higher Wednesday morning as traders place 
renewed hope on the expected trade talks with China next week. Cattle markets 
remain sluggish as pressure developed within a narrow to moderate range.

By Rick Kment
DTN Analyst

General Comments

   Mixed trade continues Wednesday morning in livestock trade as futures have 
deviated from early narrow moves. Moderate to firm support has slowly moved 
into lean hog trade based on hopes and expectations of renewed trade talks next 
week between the U.S. and China. Cattle markets have eroded on previous 
fundamental softness, while lower corn prices have had a minimal impact on 
feeder cattle trade Wednesday morning. Corn futures are lower in moderate 
trade. July corn futures are 8 cents lower. Stock markets are mixed in light 
trade. Dow Jones is 13 points higher with NASDAQ down 4 points. 

   LIVE CATTLE:

   Firm late-morning pressure is seen in live cattle trade with futures holding 
20 to 50 cent losses at midday. The softness in grain trade is limiting overall 
market activity, but pressure quickly developed, based on concerns that beef 
values may continue to erode through the week. Even though June futures remain 
lightly traded, the softness in spot trade is creating spillover weakness in 
most contracts. Traders are also taking advantage of limited volume, in order 
to square positions following moderate gains seen early in the week. Live 
cattle futures continue to remain stuck within a $5 per cwt trading range. 
There seems little interest or outside market influences developing which would 
spark a wide move in live cattle futures in order to break prices out of the 
current market range. Cash cattle bids have redeveloped through the morning at 
$109 live and $81 per cwt dressed. Even though these bids remain well below 
asking prices, dressed bids have improved significantly from levels seen 
Tuesday. Asking prices remain firm at $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 higher, $1.69 higher (select) and up $1.39 per cwt 
(choice) with active movement of 106 total loads reported (61 loads of choice 
cuts, 19 loads of select cuts, 7 loads of trimmings, 18 loads of ground beef).

   FEEDER CATTLE:

   Narrow price shifts have developed Wednesday morning was prices have shifted 
higher and lower at different points through the morning. Currently prices are 
mixed from 40 cents lower to 45 cents higher as pressure in nearby contracts is 
being directed by softness in live cattle trade. The softness in grain trade 
and potential that traders may now have a good handle on the amount of grain 
production lost this year due to wet weather and late planting is helping to 
bring buyers back into fall and winter contract months. Narrow trading ranges 
are seen nearby futures, although the recent moves is starting to slightly 
expand price premiums for fall contracts, which was essentially not existent 
over the last week.

   LEAN HOGS: 

   Strong gains have developed Wednesday morning in nearby lean hog trade as 
traders continue to focus on potential support surrounding the announcement 
that trade talks may develop with China at the G-20 Summit next week. This is 
helping to bring additional short term support, based more on the hope that 
progress is achieved in trade talks rather than any actual developments seen. 
August futures are leading the complex with $1.10 per cwt gains as traders 
continue to move prices away from long term lows set last week. Cash prices are 
lower on the National Direct morning cash hog report. The weighted average 
price is down $1.04 at $74.66 per cwt with the range from $67 to $75.14 on 
2,843 head reported sold. Cash prices are unreported due to confidentiality on 
the Iowa/Minnesota Direct morning cash hog report. Pork values slipped lower 
following mixed triple digit swings in most primals. Pork cutouts fell $0.80 
per cwt at $80.35 per cwt with 147 loads traded. Lean hog index for 6/17 is 
$79.26, down 0.01, 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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