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DTN Midday Livestock Comments 08/08 11:32
Lower Corn Excites the Livestock Complex
The arrival of weaker corn prices Monday morning was just what the livestock
contracts needed to start the week off on a higher note.
ShayLe Stewart
DTN Livestock Analyst
GENERAL COMMENTS:
Running into Monday's afternoon, the livestock complex is charged and
gunning for more. The live cattle, feeder cattle and lean hog markets are all
capitalizing on the lower trend in corn, while also hoping that fundamental
support will help propel their markets higher into the later part of the week.
December corn is down 2 cents per bushel and December soybean meal is down
$4.00. The Dow Jones Industrial Average is up 51.72 points.
LIVE CATTLE:
With the onset of lower corn prices and the upbeat tone from being able to
sell fat cattle higher last week, feedlot managers are eager to test this
week's market. As the board pushes a higher tone that's moving most of the
nearby contracts out of their sideways trading range, traders are relying on
the fact that feedlots will likely price cattle higher again this week.
However, with slaughter speeds expected to wane through the third quarter the
question is: will the fat cattle market be able to hold the market steady to
somewhat higher? If so, the bulls of the market will likely take charge and
push the complex even higher, but if not, the reality that we're still working
our way through the dog days of summer will set back in and cool the market's
current tone. August live cattle are up $0.82 at $138.70, October live cattle
are up $0.75 at $144.62 and December live cattle are up $0.60 at $150.57.
Last week's negotiated cash cattle trade totaled 102,980 head. Of that, 68%
(70,046 head) were committed for the nearby delivery, while the remaining 32%
(32,934 head) were committed for the deferred delivery.
Last week Southern live deals had a range of $135 to $138.50, mostly $135 to
$136, steady to $1 higher than the prior week's weighted averages. Northern
dressed business had a rather large range of $224 to $232, mostly $225 to $227,
steady to $2 higher than the previous week's weighted average basis Nebraska.
Boxed beef prices are higher: choice up $1.79 ($266.41) and select up $1.15
($239.82) with a movement of 50 loads (25.29 loads of choice, 9.65 loads of
select, 7.74 loads of trim and 6.95 loads of ground beef).
FEEDER CATTLE:
As the corn market traipses $0.03 to $0.04 lower in its nearby contracts,
the feeder cattle market is running higher into Monday's start to make the most
of the corn market's weakness. With the announcement that more vessels have
left the ports of Ukraine, and with the timely rains that came this past
weekend, the corn market is feeling pressured from multiple different angles.
The onset of a weaker corn complex and a somewhat strengthened live cattle
market could make all the difference for the feeder cattle market this week.
The market sits well positioned to rally technically, as the market continues
to support upside trade potential as the contracts look to finish the head and
shoulders formation in the September contract. Last week, Superior Livestock
Auctions hosted their Video Royale sale in Winnemucca, Nevada, and buyers
showed no concerns about the market and bought both calves and feeders with
immense aggression. August feeders are up $2.35 at $181.87, September feeders
are up $2.75 at $186.12 and October feeders are up $2.20 at $188.15.
LEAN HOGS:
The lean hog market is rallying into Monday's afternoon as the market
continues to see support from consumers and rallies on the fact that supplies
are limited right now. October lean hogs are up $2.05 at $100.45, December lean
hogs are up $0.92 at $89.75 and February lean hogs are up $0.55 at $91.85. It's
likely that the cash hog market is higher again this week as the pork cutout
value is showing signs that it could be higher Monday afternoon, and packers
don't want to miss out on an opportunity to sell more meat. This Friday the
market will see another WASDE report released, which should give both the
cattle and hog markets insight into what both production speeds and demand are
gauged to be late this year and into next year.
The projected lean hog index for Aug. 5 is down $0.17 at $121.92 and the
actual index for Aug. 4 is up $0.48 at $122.09. Hog prices are lower on the
Daily Direct Morning Hog Report, down $0.79 with a weighted average of $122.88,
ranging from $114.00 to $135.00 on 6,375 head and a five-day rolling average of
$126.09. Pork cutouts total 145.93 loads with 108.31 loads of pork cuts and
37.62 loads of trim. Pork cutout values: up $3.95, $128.98.
ShayLe Stewart can be reached shayle.stewart@dtn.com
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