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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


   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.


   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).


   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.


   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

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