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DTN Midday Livestock Comments          05/21 12:21

   Cattle Futures Scream Higher at Midday

   The cattle complex is sharply higher near the top of the noon hour, 
supported by aggressive short covering and ideas of better demand possibilities 
for U.S. beef out of China. At the same time, lean hog issues are moderately 
lower, checked by profit taking, cash discounts, and the uncertain fate of 
China tariffs on U.S. pork. 

By John Harrington
DTN Analyst

GENERAL COMMENTS: 

   Feedlot country is very quiet as players complete the distribution of new 
showlists. Ready numbers appear to be somewhat larger than last week with only 
Kansas offering a few less steers and heifers. According to the noon report, 
the national hog base is not tested due to rules of confidentiality. Corn 
futures are several cents higher at midday, supported by spillover buying from 
the bean trade and positive implications stemming from better U.S./China trade 
relations. The stock market is sharply higher in the wake of the truce declared 
in the trade war. The Dow is 305 points higher with the Nasdaq better by 44. 

   LIVE CATTLE: 

   Live issues are sharply higher at midday with prices range 147 to 257 in the 
green. While there's no certainty regarding better beef demand from China, the 
mere possibility has sparked serious buying, probably in part because charts 
were oversold to begin with. Beef cut-outs are lower at midday, off 0.34 
(select, $208.12) to $1.01 (choice, $231.20) with light to moderate box 
movement (22 loads of choice cuts, 14 loads of select cuts, 13 loads of 
trimmings, 13 loads of coarse grinds).

   FEEDER CATTLE: 

   Triple-digit gains dominate here as well at midday (i.e., up 147 to 272) as 
feeders follow the bullish lead of the live market. On an estimated run of 
9,300 head (down from 10,070 last week but up from 5,516 last year). Oklahoma 
City has not adequately tested the feeder market as of yet. A limited amount of 
calves have sold with a lower undertone.  

   LEAN HOGS: 

   It seems a bit surprising, but hog traders are ignoring the possibility of 
new Chinese potential at midday. Indeed, futures are mostly solidly lower at 
midday (i.e., off 30 to 90).  Traders and analysts are confused as to what the 
new "nice talk" between negotiators this weekend means relative to tariffs on 
U.S. pork already in place. Will they now be lifted. No one seems to know. 
Carcass value looks explosive at midday with all primals quoted sharply 
high(especially bellies and hams) except for the butt. Pork cut-out: $78.00, up 
$4.09 CME cash lean index for 05/17: 67.74, up 0.73 (DTN Projected lean index 
for 05/18: 68.38, up 0.64).

   John A. Harrington can be reached at john.harrington@dtn.com 


(SK)

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