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DTN Midday Livestock Comments 03/03 11:47
Cash Cattle Trade Developing With Weaker Undertones
As live cattle futures cave to Wednesday's pressure, the cash cattle market
is more or less doing the same as sales are starting to test the market
already.
ShayLe Stewart
DTN Livestock Analyst
GENERAL COMMENTS:
It's been a peculiar morning for livestock futures as early in the day
support flourished throughout the entire marketplace, but as the noon hour
approached the market's support was quick to fade in live cattle futures.
Meanwhile the lean hog contracts are back to trading higher after many thought
the market was set on now scaling lower. May corn is down 11 cents per bushel
and May soybean meal is down $4.20. The Dow Jones Industrial Average is up
59.75 points and NASDAQ is down 165.30 points.
LIVE CATTLE:
It's been a mixed morning for live cattle futures as the contracts have
tried to trade higher, but support is thin and is willing to quickly ease away
from pressure. April live cattle are down $0.15 at $119.27, June live cattle
are down $0.22 at $117.52 and August live cattle are down $0.15 at $116.65. The
live cattle market is a tough environment right now as cash cattle sellers
can't get the interest or support they need and the board is willing to cave to
any pressure the day may find. There's been some cash cattle trade in the North
for $180, $2.00 lower than last week's average, and in the South for $114,
which is fully steady with last week's business. It's disappointing to see cash
cattle already trading as packers are running vigorous processing speeds and
will obviously need to restock their supplies. Making trade wait until the
later part of the week always favors a stronger cash cattle market.
Boxed beef prices are mixed: choice down $1.37 ($233.31) and select up $0.23
($226.40) with a movement of 71 loads (37.77 loads of choice, 9.47 loads of
select, 16.35 loads of ground beef and 7.60 loads of trim).
FEEDER CATTLE:
Corn prices are lower and there's some optimism circling through the feeder
cattle and live cattle futures which is helping boost the cattle market's
morale ever so slightly. March feeders are down $0.22 at $136.30, April feeders
are up $0.05 at $140.52 and May feeders are up $0.32 at $143.90. With the
immense pressure feeder cattle contracts have been under, corn prices pushing
daily cost of gain prices notably higher, and underlying weakness in the cash
cattle market, feeder cattle futures have some room to trade higher without
coming up against resistance levels. Demand throughout the countryside is
favoring cattle and lightweight feeders that can make suitable grass cattle.
Diving into lots, having no other option but to go straight onto a feed ration,
is a risky purchase right now for buyers.
LEAN HOGS:
Pork demand is extraordinary and the hog market is outperforming what most
thought even possible! It's a hard market to pinpoint as your gut wants to tell
you the hog run is over and long overdue for a correction, but then the hog
contracts keep fighting for more and Tuesday's afternoon pork cutout value
closed higher again. With Easter being a little over a month away, watching
processing speeds throughout the hog market will be a big indication of when
packers plan to cool down chain speeds and let the cash hog market tumble lower
and regain some of their margin. But in the meantime, the high-stakes poker
game continues as the hog market bounces higher and lower, fighting technical
pressures and praying fundamental support continues to stoke the market's fire.
April lean hogs are up $2.47 at $87.85, June lean hogs are up $1.15 at $94.62
and July lean hogs are up $1.05 at $95.25.
The projected CME Lean Hog Index for 3/2/2021 is up $0.64 at $83.27, and the
actual index for 3/1/2021 is up $0.73 at $82.63. Hog prices are $1.00 higher on
the National Direct Morning Hog Report, with a weighted average of $79.42,
ranging from $75.00 to $83.00 on 3,350 head and a five-day rolling average of
$77.49. Pork cutouts total 171.42 loads with 144.77 loads of pork cuts and
26.65 loads of trim. Pork cutout values: down $0.65, $94.22.
ShayLe Stewart can be reached shayle.stewart@dtn.com
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