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DTN Midday Livestock Comments          05/06 11:41

   Lower-Trending Thursday Consumes Lean Hog and Feeder Contracts

   Both the lean hog and feeder cattle contracts dipped lower heading into 
Thursday afternoon, while the live cattle contracts continued to flirt with the 
idea of trading somewhat higher.

ShayLe Stewart
DTN Livestock Analyst


   It's been a quiet day throughout the livestock complex as the contracts are 
trending mostly lower, and the market isn't in a hurry to jump higher or lower. 
The live cattle contracts are seeing some modest support seep in from traders, 
but the complex largely is still indecisive on whether to trade higher or lower 
the rest of the day. July corn is up 6 1/2 cents per bushel, and July soybean 
meal is up $1.90. The Dow Jones Industrial Average is up 191.45 points, and the 
NASDAQ is up 14.55 points.


   The live cattle contracts are soaking up the modest support that traders are 
cautiously extending, but the market has thus far been skeptical about trading 
fully higher. June live cattle are up $0.02 at $114.47, August live cattle are 
up $0.05 at $117.77 and October live cattle are down $0.25 at $122.85. One 
would think that the stellar beef demand that the market's been shown would 
drive fat cattle prices and incentivize packers to want to kill as many cattle 
as possible while demand is thriving -- but, unfortunately, that's not the 
case. With packers having a large percentage of their cattle already bought for 
this time through forward contracts, their need to dive into the cash market is 
minimal. The cash cattle market is still quiet without any bids having been 
renewed. It's looking like the bulk of this week's business is essentially 
already over.

   Beef net sales of 16,900 metric tons (mt) reported for 2021 were down 28% 
from the previous week and 18% from the prior four-week average. The three 
primary buyers were Japan (4,600 mt), Mexico (3,000 mt) and Taiwan (2,900 mt).

   Boxed beef prices are higher: choice up $2.48 ($307.26) and select up $3.95 
($290.13) with a movement of 47 loads (29.44 loads of choice, 7.64 loads of 
select, 3.54 loads of trim and 6.80 loads of ground beef).


   The corn market may only be securing a modest rally, but its relentless 
nature is having a dramatic toll on the feeder cattle contracts. May feeders 
are down $0.62 at $130.85, August feeders are down $2.12 at $143.10 and 
September feeders are down $2.22 at $145.25. It's utterly painful to look at 
the cattle market from a cattle feeder's perspective -- all inputs are higher, 
fat cattle are selling for shameful prices, and yet, slaughter speeds are 
running at mediocre levels and boxed beef prices are sharply higher. There's 
money floating around throughout the market, but it's not working its way down 
to the cattle feeders or cow-calf producers.


   Traders decided it was best to step to the sidelines of the lean hog complex 
and to allow for the market to sit idle and catch its breath after the week's 
impressive rally. June lean hogs are down $0.10 at $114.32, July lean hogs are 
up $0.07 at $114.52 and August lean hogs are down $0.07 at $109.72. It's not 
that the market is lacking fundamental support, or that the morning's export 
report was bearish, but simply that traders want to give the market an 
opportunity to trade slightly lower to mostly steady before driving higher. 
Cash prices are weaker Thursday morning, but given the volatile nature of the 
current hog market, drastic swings are fully anticipated. 

   Pork net sales of 48,200 mt reported for 2021 were up 36% from the previous 
week and up noticeably from the prior four-week average. The three primary 
buyers were Mexico (19,400 mt), China (15,000 mt) and Japan (4,700 mt).

   The projected lean hog index for 5/5/2021 is up $0.66 at $108.55, and the 
actual index for 5/4/2021 is up $0.52 at $107.89. Hog prices are lower on the 
National Direct Morning Hog Report, down $2.83 ranging from $108.38 to $125.00 
on 3,605 head and a five-day rolling average of $111.72. Pork cutouts total 
137.53 loads with 110.79 loads of pork cuts and 26.74 loads of trim. Pork 
cutout values: up $2.72, $114.63.

   ShayLe Stewart can be reached

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