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DTN Midday Livestock Comments          05/13 11:37

   Pressure is Building Even Though Corn Trades Lower

   One would have thought the 40-cent decline in corn futures would have sent 
feeder cattle contracts through the roof; instead the contracts are trading 
fully lower as well. 

ShayLe Stewart
DTN Livestock Analyst

   GENERAL COMMENTS:

   Seeming to want to better understand if the corn market intends to fall 
lower just through Thursday trade or continue to decline, traders have stepped 
away from not only corn futures but also the livestock contracts. July corn is 
down 40 cents per bushel and July soybean meal is down $26.20. The Dow Jones 
Industrial Average is up 425.25 points and NASDAQ is up 88.15 points.

   LIVE CATTLE:

   The cash cattle market is a tricky one this week as half the market seems to 
be set on holding out and demanding higher prices amid stellar boxed beef 
profits, but the other half was willing to trade cattle on Tuesday with delayed 
delivery extending into the second week of June. As feedlots look at the corn 
market and see prices finally starting to remember that gravity eventually 
pulls everything back down to earth, some feedlots are hopeful and are tired of 
the market's steady to lower prices and want to see more offered. 
Unfortunately, the board isn't helping feedlots' quest to demand higher prices 
as the market tumbles at least $3.00 lower in most of the contracts. June live 
cattle are down $3.70 at $114.90, August live cattle are down $4.00 at $118.32 
and October live cattle are down $3.85 at $122.70. The cash cattle market is 
still quiet with only one bid renewed in Nebraska at $119.

   Beef net export sales of 13,100 metric tons (mt) reported for 2021 were down 
22% from the previous week and 35% from the prior four-week average. The three 
largest buyers were Japan (4,100 mt), China (2,400 mt) and South Korea (2,000 
mt).

   Boxed beef prices are mixed: choice up $2.00 ($317.08) and select down $0.71 
($296.45) with a movement of 50 loads (21.94 loads of choice, 7.16 loads of 
select, 5.31 loads of trim and 15.59 loads of ground beef).

   FEEDER CATTLE:

   Even though corn futures are mostly 31- to 40-cents lower, the feeder cattle 
contracts are lower too. Early Thursday morning the contracts were reveling in 
the fact that for another day it looked like traders were going to support 
higher trade as the rising cost of inputs had subsided for the time being. But 
I guess that teaches us not to put the cart before the horse. As the corn 
market plunges lower, traders seem to be growing more and more aware of how 
volatile the market can be when prices are as exuberant as they've become in 
corn t and have consequently stepped away from the market all together. May 
feeders are up $0.40 at $137.15, August feeders are down $0.85 at $149.67 and 
September feeders are down $0.85 at $151.20.  

   LEAN HOGS:

   Lean hog futures continue to trade lower, not seeming to care one way or 
another what the market's fundamentals do. June lean hogs are down $2.17 at 
$109.87, July lean hogs are down $2.35 at $109.57 and August lean hogs are down 
$2.20 at $105.45. The morning's export report was lower, but still China 
continues to be one of the market's three largest buyers, which is always 
encouraging. Given that it's only the middle of May and the peak of grilling 
season remains ahead of the market, pork demand should continue to thrive. 
Since the market has jumped to abnormally high prices, we must remember that 
volatile price swings are expected.

   Pork net export sales of 14,700 mt reported for 2021 were down 69% from the 
previous week and 25% from the prior 4-week average. The three largest buyers 
were Mexico (5,300 mt), China (3,000 mt) and Japan (2,000 mt).

   The projected CME Lean Hog Index for 5/12/2021 is down $0.01 at $110.94, and 
the actual index for 5/11/2021 is up $0.22 at $110.95. Hog prices are lower on 
the National Direct Morning Hog Report, down $1.55 with a weighted average of 
$110.06, ranging from $104.44 to $121.00 on 2,134 head and a five-day rolling 
average of $110.82. Pork cutouts total 139.09 loads with 121.30 loads of pork 
cuts and 17.80 loads of trim. Pork cutout values: up $6.34, $120.45.

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




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