DTN Midday Livestock Comments 06/24 11:42
Hogs Brace Themselves Ahead of Quarterly Report
Feeder cattle futures could care less that the live cattle and lean hog
contracts are skeptical; when corn trades lower feeders find themselves an
opportunity and capitalize on it.
DTN Livestock Analyst
Feeder cattle futures are the only livestock contracts really taking full
advantage of Thursday's support as both live cattle and lean hog contracts have
contradicting signals to manage. Heading into Thursday afternoon the market
will be anxious to see what USDA's quarterly Hogs and Pigs report yields and
what cash cattle trade develops into. July corn is down 9 1/2 cents per bushel
and July soybean meal is down $4.40. The Dow Jones Industrial Average is up
238.64 points and NASDAQ is up 135.88 points.
Live cattle futures are caught between a rock and hard spot as the market
likes the idea of trading higher but doesn't feel like the nearby contracts can
do so considering the undeveloped cash cattle market. The hype surrounding the
feeder cattle rally given the lower trending corn market has allowed for some
of the deferred live cattle contracts to rally; but nearby contracts are
skeptical. August live cattle are down $0.35 at $122.52, October live cattle
are steady at $128.17 and December live cattle are up $0.17 at $131.67. If the
technical side of the market can trade fully higher, it may add enough pressure
to the cash cattle market to persuade packers into paying at least $1.00 higher
if not more. There are a few scattered bids on the table thus far but largely
the market is still oddly quiet. There's been a few cattle trade in Nebraska at
$126 Thursday morning but otherwise the market's yet to see any substantial
Beef net export sales of 16,900 metric tons (mt) reported for 2021 were up
31% from the previous week, but down 3% from the prior four-week average. The
three largest buyers were South Korea (6,700 mt), Japan (4,000 mt) and China
Boxed beef prices are mixed: choice down $4.19 ($307.86) and select up $1.00
($276.41) with a movement of 70 loads (40.21 loads of choice, 13.35 loads of
select, 10.29 loads of trim and 6.57 loads of ground beef).
The feeder cattle market is thankfully trading higher amid a lower trending
corn complex. It is also savoring the sweet essence of higher trade as Northern
is hosting their Early Summer Special sale Thursday. August feeders are up
$1.10 at $156.80, September feeders are up $0.85 at $158.92 and October feeders
are up $0.87 at $160.85. The market is indeed trending higher but is still
timid of pushing past the resistance in the spot August contract at $162.00.
Ahead of Thursday afternoon's quarterly Hogs and Pigs report, the lean hog
market is trying to trudge through another day of mixed market signals. The
futures complex is seeing minor support creep into some of the deferred
contracts, but the nearby contracts are still feeling heavily pressured. July
lean hogs are down $3.95 at $100.57, August lean hogs are down $1.20 at $99.52
and October lean hogs are down $0.20 at $83.65. The volatility in the pork
cutout values lives on as the morning's pork cutout report shared that the
day's cutout was up $7.00. These violent swings are likely to be the market's
tone until a bottom to this downward spiral is found.
Pork net export sales of 28,600 mt reported for 2021 were down 2% from the
previous week and 4% from the prior 4-week average. The three largest buyers
were Mexico (11,500 mt), Canada (5,200 mt) and Japan (3,200 mt).
The projected CME Lean Hog Index for 6/22/2021 is down $1.14 at $119.59, and
the actual lean hog index for 6/21/2021 is up $0.05 at $120.73. Hog prices are
lower on the National Direct Morning Hog Report, down $6.61 with a weighted
average of $116.33, ranging from $110.00 to $125.00 on 4,615 head and a
five-day rolling average of $119.10. Pork cutouts total 163.02 loads with
143.96 loads of pork cuts and 19.05 loads of trim. Pork cutout values: up
ShayLe Stewart can be reached at email@example.com
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