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DTN Midday Livestock Comments          05/30 11:34

   Cheaper Corn Sends Livestock Rallying

   The onset of cheaper corn prices has helped spark the interest of traders in 
the livestock complex.

ShayLe Stewart
DTN Livestock Analyst


   It's a jolting day for the livestock complex as all three of the livestock 
markets are rallying thanks to the decline of corn prices. No cash cattle trade 
has developed yet and bids and asking prices won't likely be available until 
Wednesday. July corn is down 10 1/4 cents per bushel and July soybean meal is 
down $4.80. The Dow Jones Industrial Average is down 119.42 points.


   Even though one would logically assume that corn prices would have little 
affect on the live cattle market, as fat cattle are nearly at the end of their 
feeding days, the live cattle market is indeed directly affected by corn 
prices. That being said, the live cattle market is rallying like the feeder 
cattle and lean hog complexes, as beef demand remains incredible, cash cattle 
prices continue to strive for higher price points and now corn prices are 
trading lower too. June live cattle are up $1.35 at $168.70, August live cattle 
are up $1.92 at $167.15 and October live cattle are up $1.75 at $171.35. No 
cash cattle trade has been reported at this point, and no business will likely 
be conducted until Wednesday or later. Feedlots are expected to again price 
their showlists higher.

   Most of last week's negotiated cash cattle trade took place on Wednesday, 
but there was a little clean-up trade later on Thursday and Friday. Northern 
dressed cattle ranged from $280 to $287, but mostly sold at $285 to $286, which 
is $4.00 to $5.00 higher than the previous week's weighted averages. Southern 
live cattle traded from $170 to $174, which was steady in Kansas but $1.00 
higher in Texas.

   Boxed beef prices are higher: choice up $1.09 ($305.02) and select up $3.52 
($288.44) with a movement of 56 loads (33.62 loads of choice, 10.89 loads of 
select, 2.97 loads of trim and 8.28 loads of ground beef).


   What a way to dive into the new week for the feeder cattle complex! Corn 
prices posed quite the threat on the feeder cattle market last week, but with 
Tuesday's corn prices trending anywhere from $0.09 to $0.15 lower, the feeder 
cattle complex has nearly cracked in two as it explodes higher. August feeders 
are up $4.47 at $238.40, September feeders are up $4.35 at $241.45 and October 
feeders are up $4.17 at $243.20. One of the biggest driving factors for the 
feeder cattle complex in the weeks/months ahead will be moisture or the lack 
there of. Some regions of the U.S. have recently received good spring rains, 
but other pockets of the nation are still unbearably dry and cow-calf producers 
are continuing to be forced to liquidate their herds. Nevertheless, Tuesday's 
market has been exhilarating for feeders as the corn complex has finally given 
the market a break after last week's upward trend in corn.


   The combination of cheaper corn prices amid a sharply higher midday pork 
cutout report is helping spur on higher trade throughout the lean hog complex. 
Yes, we know and understand that you can't put too much clout into the day's 
midday pork cutout value, as anything could happen between now and the 
afternoon's report release, but, at this point, the lean hog complex is running 
aggressively higher. June lean hogs are up $4.07 at $80.15, July lean hogs are 
up $4.75 at $79.52 and August lean hogs are up $4.75 at $78.80. The market 
still has plenty of hurdles to navigate in the months ahead as the ruling on 
Prop 12 will gravely affect the entire lean hog complex, but Tuesday's higher 
tone does make one wonder if a bottom in the market is being found.

   The projected lean hog index for May 29 is down $0.40 at $80.08 and the 
actual index for May 25 is down $0.32 at $80.48. Hog prices on the Daily Direct 
Morning Hog Report average $75.11, ranging from $74.00 to $81.00 on 3,915 head 
and a five-day rolling average of $77.82. Pork cutouts total 171.59 loads with 
158.44 loads of pork cuts and 13.15 loads of trim. Pork cutout values: up 
$4.71, $86.91.

   ShayLe Stewart can be reached

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