DTN Midday Livestock Comments 06/15 11:39
Feeders Are Back at It
Continuing in Monday's manner, the feeder cattle and live cattle contracts
are back to rallying Tuesday amid lower corn prices.
DTN Livestock Analyst
The strength that the feeder cattle contracts saw throughout Monday's trade
is again evident in Tuesday's market as the contracts continue to push higher
and higher. The excitement in the feeder cattle market is trickling into the
live cattle arena. But given that the cash cattle market has yet to be tested
this week, we don't know if it will be enough support to offset the market's
weaker boxed beef prices. July corn is down 4 3/4 cents per bushel, and July
soybean meal is down $1.60. The Dow Jones Industrial Average is down 138.40
points, and the NASDAQ is down 83.93 points.
As unbelievable as it may seem given that the market hasn't seen much
support over the last two months, the live cattle contracts are rallying well
over $1 higher in the nearby contracts. The market's decision to trade higher
seems somewhat odd given the fact that boxed beef prices have just recently
made a seasonal top and that they're now trading lower. But the support that's
spinning in the feeder cattle market has seeped over to the live cattle sector,
and corn's lower descent comes as a breath of fresh air. June live cattle are
up $1.52 higher at $120.90, August live cattle are up $2 at $123.27, and
October live cattle are up $1.55 at $128.35. The cash cattle market has yet to
see any business develop, but if the week follows the market's recent trend
some trade could begin to develop later this afternoon. Bids are elusive to the
market at this point, but asking prices in the South have been noted at $122
plus, and in the North from $195 to $197.
Boxed beef prices are lower: choice down $0.80 ($334.67) and select down
$4.78 ($298.63) with a movement of 69 loads (32.88 loads of choice, 22.04 loads
of select, 11.29 loads of trim and 2.88 loads of ground beef).
The feeder cattle contracts have waited a long time since they last saw the
market trade higher. August feeders are up $2.60 at $157.20, September feeders
are up $2.25 at $159.07 and October feeders are up $2.12 at $60.70. The
market's strength is solely rallying off the fact that the corn market is
trading lower. High input costs are plaguing the entire beef sector, from the
high price of grass to the growing price of hay. And, of course, the sharply
high corn prices make it hard for anyone's math equation to find a profitable
outcome given the current market environment. If this upward momentum could
hold at least steady throughout the week, it's very likely that the Superior's
Corn Belt Classic could see some excited buyers. But just as the market can
trade higher, a change in the corn market could weaken the market's hopeful
Despite the starkly higher cash hog prices and the higher pork cutout
values, the lean hog contracts aren't willing to turn and trade higher just
yet. With the contracts trading at levels not seen since 2014, traders want to
be certain (C.E.R.T.A.I.N) that the demand seen in the market is indeed going
to trend throughout the week before they move their positions in support. July
lean hogs are down $0.40 at $117.82, August lean hogs are down $0.87 at $113.92
and October lean hogs are down $0.87 at $93.95. Tuesday's slaughter is
estimated at 483,000 head, which would be a strong day for the market.
The projected lean hog index for 6/14/2021 is up $0.75 at $122.66, and the
actual index for 6/11/2021 is up $1.05 at $121.91. Hog prices are sharply
higher on the National Direct Morning Hog Report, up $10.69 with a weighted
average of $121.38, ranging from $110.43 to $136.00 on 4,970 head and a
five-day rolling average of $114.30. Pork cutouts total 195.48 loads with
176.03 loads of pork cuts and 19.45 loads of trim. Pork cutout values: up
ShayLe Stewart can be reached at email@example.com
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