DTN Midday Livestock Comments 06/18 11:39
Live Cattle, Lean Hogs Looking to Regain Positioning
The entire livestock sector would be trading higher if the feeder cattle
complex wasn't being pressured by the corn market. Just the live cattle and
lean hog contracts are rallying into Friday afternoon.
DTN Livestock Analyst
After Thursday's bearish afternoon close, the live cattle and lean hog
contracts have jumped to Friday's arrival and are looking to resecure some of
the position that Thursday gave up. The feeder cattle contracts are back to
bowing down to the corn market, though, as corn prices are anywhere from $0.18
to $0.32 higher. July corn is up 19 cents per bushel and July soybean meal is
up $10.50. The Dow Jones Industrial Average is down 403.77 points and NASDAQ is
down 81.80 points.
Attempting to regain some of what the market threw away in Thursday's
sell-off, the live cattle contracts are trading well over $1.00 higher
throughout the entire complex. June live cattle are up $1.70 at $121.80, August
live cattle are up $1.37 at $122.47 and October live cattle are up $1.20 at
$127.77. Even though Thursday's sell-off was disappointing, looking at the week
the live cattle market and the cash cattle market have had is rather
impressive. If Friday's slaughter can come in at a sizeable level and if
packers can run a fast Saturday kill, this week will also be gunning for an
impressive slaughter somewhere around 660,000 head, depending on how Friday and
Saturday shake out. I know it can be tempting to see lower boxed beef prices
and think the market is subpar. But a seasonal high was fully anticipated and
the market's current boxed beef prices are still allowing packers to make
healthy profits. It's looking like the week's cash cattle trade is done with as
there haven't been any bids renewed.
Boxed beef prices are lower: choice down $0.78 ($325.47) and select down
$1.59 ($285.65) with a movement of 58 loads (32.97 loads of choice, 12.88 loads
of select, 5.71 loads of trim and 6.28 loads of ground beef).
Simply put, the feeder cattle contracts are cussing the corn market as they
thoroughly enjoyed rallying throughout the earlier part of the week when corn
was dogging lower. Thankfully the market's weaker demeanor comes after the
nation's first big test of feeder cattle prices for the year. If you didn't get
a chance to watch Superior's Corn Belt Classic on Thursday, the market was hot
as buyers came charged and ready to buy cattle and program cattle (NHTC,
verified natural and GAP 4) especially saw exceptional demand. August feeders
are down $0.25 at $157.15, September feeders are down $0.57 at $158.52 and
October feeders are down $0.77 at $159.92.
The lean hog complex is somewhat licking its wounds after this last week and
attempting to regain some lost positioning before the week's end. July lean
hogs are down $0.30 at $110.70, August lean hogs are up $0.95 at $108.17 and
October lean hogs are up $1.92 at $88.85. The market sees more and more support
from the October 2021 contract on out into the deferred months, where the
market hopes to find more stability. The cash hog market is lower Friday
morning which doesn't come as an unsettling surprise given how aggressive
packers were earlier in the week. Heading into the weeks to come, even though
supplies are thin, packers may be a little more cautious of the market until
they see some of the week's demand and performance.
The projected CME Lean Hog Index for 6/17/2021 is down $1.30 at $120.38 and
the actual index for 6/16/2021 is down $0.91 at $121.68. Hog prices are lower
on the National Direct Afternoon Hog Report, down $3.26 with a weighted average
of $116.04, ranging from $113.00 to $134.00 on 2,445 head and a five-day
rolling average of $118.50. Pork cutouts total 192.40 loads with 170.29 loads
of pork cuts and 22.12 loads of trim. Pork cutout values: up $2.75, $127.58.
ShayLe Stewart can be reached at email@example.com
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