DTN Midday Livestock Comments 06/16 11:46
Feeders Higher Amid Rallying Corn Prices
The cattle market is seeming to gain more interest as the week trades on
despite rallying corn prices and a weaker boxed beef market.
DTN Livestock Analyst
The market hasn't changed much from Tuesday as the cattle contracts continue
to rally higher and the lean hog market continues to veer lower. But what has
been interesting is watching the market's confidence in the cattle rally grow
throughout the week. Even with corn prices trending higher, the feeder cattle
contracts are standing firm in their rally and cattlemen hope this positive
roll is seen in this week's Superior sale. July corn is up 11 1/2 cents per
bushel and July soybean meal is up $9.20. The Dow Jones Industrial Average is
down 66.53 points and NASDAQ is down 22.79 points.
Live cattle futures have broken out and are taking Wednesday by charge as
traders are willing to invest and the higher prices seen throughout the cash
market are invigorating the surge. June live cattle are up $1.07 at $122.30,
August live cattle are up $1.27 at $125.17 and October live cattle are up $1.15
at $129.77. This rally comes at a perplexing time as the boxed beef market is
veering lower. But its momentum is so strong that a number of the contracts
have made new contract highs. As we mentioned before, it will be vital for the
long-term health of the cattle market to see vigorous processing speeds
throughout the entire month of June. If the market can kick production into
high gear and far surpass what it's been doing as of late, then optimism could
continue to build. There's been a light trade of cattle in parts of Nebraska
for $124 live and $195 dressed, along with some cattle in Kansas for $122 live.
The Fed Cattle Exchange Auction listed a total of 6,049 head; 889 actually
sold; 712 head were scratched from the auction; and 4,448 head were listed as
unsold, as they did not meet the reserve prices, which ranged from $120 to
$122.50. Opening prices ranged from $118 to $120, high bids ranged from $119.25
to $122.50. The state-by-state breakdown looks like this: Texas 5,585 total
head, with 793 head sold at $121 to $122.50, 678 head were scratched from the
auction, and 4,114 head went unsold; Kansas 339 total head, with 27 head sold
at $119.25, 34 head were scratched from the auction, and 27 head went unsold;
Oklahoma 125 total head, with 61 head sold at $122, 64 head went unsold.
Boxed beef prices are lower: choice down $2.92 ($331.51) and select down
$6.56 ($291.72) with a movement of 92 loads (47.82 loads of choice, 20.12 loads
of select, 17.11 loads of trim and 6.93 loads of ground beef).
The feeder cattle market is serious about its rally this week and is
rallying despite the corn market's strength which has come with Wednesday's
favorable weather for this year's corn crop. Cow-calf producers are praying the
market's strength is able to sustain throughout the end of the week and can
encourage the large feeder cattle sales to push for higher prices. Feedlots,
more than anything, want input costs to become more manageable as selling
cattle at $120 to $122 amid $6.00 corn isn't a winning equation. August feeders
are up $0.72 at $157.55, September feeders are up $0.85 at $159.50 and October
feeders are up $0.87 at $160.90.
The pressure continues to build in the lean hog market as the market endures
losses of $2.00 to $3.00 in its nearby contracts. With the regression seen over
the last six days in the afternoon pork cutout value, traders aren't willing to
rally the complex amid weaker demand. July lean hogs are down $3.00 at $115.50,
August lean hogs are down $3.00 at $111.70 and October lean hogs are down $3.00
at $91.02. Seeing the market trade lower isn't something we've seen in quite
some time; but understanding that prices eventually top and supplies are still
thin needs to be stressed as the market isn't battling an overabundance of hogs
by any means.
The projected CME Lean Hog Index for 6/15/2021 is down $0.07 at $122.59 and
the actual index for 6/14/2021 is up $0.75 at $122.66. Hog prices are higher on
the National Direct Morning Hog Report, up $0.76 with a weighted average of
$122.14, ranging from $113.09 to $136.00 on 5,320 head and a five-day rolling
average of $117.20. Pork cutouts total 219.23 loads with 197.37 loads of pork
cuts and 21.85 loads of trim. Pork cutout values: up $2.11, $124.62.
ShayLe Stewart can be reached at firstname.lastname@example.org
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