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DTN Midday Livestock Comments          05/24 11:45

   Hogs Hit the Pause Button

   The feeder cattle contracts are cherishing the fact that corn is trending 
lower and that the live cattle market is lending support in order for its 
market to trend higher for a change.

ShayLe Stewart
DTN Livestock Analyst


   From Monday's market, the livestock contracts have flipped positions as the 
cattle complex has found support and lean hog are trending lower. The hog 
market's pause on its ascend comes as fundamental support lags. Traders need to 
continue to see strong cash interest from packers and a supporting pork cutout 
value in order to keep prices trending higher. July corn is down 22 3/4 cents 
per bushel and July soybean meal is up $2.10. The Dow Jones Industrial Average 
is down 263.09 points.


   The live cattle market is keeping with its elevated tone and modestly 
pushing the contracts higher except for the spot August contract, which is 
seeing minor pushback. The live cattle market is somewhat holding its breath as 
the market's technicals have strengthened somewhat with boxed beef prices 
trending higher and traders interested in supporting the market. However, the 
fate of the cash cattle market isn't going to change in the near future. As 
supplies begin to overwhelm the market, packers are able to sit back and let 
shows build to the point where feedlots are begging for any bid, let alone a 
decent one. Nevertheless, the cash cattle market hasn't seen any interest thus 
far in the day, and it's likely that packers show the market very little 
interest this week as they sit on large numbers of cattle committed in their 
deferred delivery. Asking prices in the South are noted at $140 and the North 
has yet to disclose their asking prices.

   Boxed beef prices are higher: choice up $0.64 ($264.92) and select up $1.91 
($246.14) and with a movement of 77 loads (41.61 loads of choice, 19.19 loads 
of select, 3.56 loads of trim and 12.57 loads of ground beef).


   As the corn market dives $0.19 to $0.22 lower in its nearby contracts, the 
feeder cattle market wastes no time springing to a $3.00 rally. August feeders 
are up $3.05 at $168.67, September feeders are up $3.20 at $171.50 and October 
feeders are up $3.02 at $173.77. Largely, the feeder cattle market's strength 
comes from a two-sided combo as corn prices take a turn for lower prices and, 
given the vast downfall that feeders had last week, the market can rally its 
position without any nearby fears of resistance pressure. The market will 
closely watch corn prices heading into the afternoon -- any support the live 
cattle market can lend will only strengthen feeders.


   Last week, the lean hog complex was able to rally as the market's technicals 
and fundamentals worked together to advance the market higher. But with 
Monday's mixed close (a higher futures market and stronger slaughter pace, but 
a weak cash market and weaker pork cutout value), Tuesday's market is left to 
sort out the find details. June lean hogs are down $1.45 at $108.92, July lean 
hogs are down $1.60 at $109.25 and August lean hogs are down $1.67 at $108.55. 
In order for traders to feel comfortable in pushing the market any higher, 
they'll need to see strong cash interest and demand from consumers.

   The projected lean hog index for May 23 is up $0.95 at $103.03, and the 
actual index for May 20 is up $0.91 at $102.08. Hog prices on the Daily Direct 
Morning Hog Report average $111.39, ranging from $100.00 to $113.50 on 1,990 
head and a five-day rolling average of $110.27. Pork cutouts total 164.12 loads 
with 142.24 loads of pork cuts and 21.88 loads of trim. Pork cutout values: up 
$0.81, $107.86.

   ShayLe Stewart can be reached

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