DTN Midday Livestock Comments 09/29 12:26
Cattle Contracts Rallying Through Tuesday
Cattle contracts are jumping at the opportunity to scale higher, rallying as
much as $3.00 in the feeder cattle arena.
DTN Livestock Analyst
The cattle contracts are thriving Tuesday afternoon as support has rallied
the two markets substantially -- especially the feeder cattle market. Meanwhile
the lean hog sector is scaling lower as a unanimous consensus that the complex
should trade higher doesn't seem likely for the time being. December corn is
down 4 cents per bushel and December soybean meal is down $2.00. The Dow Jones
Industrial Average is down 196.69 points and NASDAQ is down 26.95 points.
Live cattle contracts are rallying Tuesday afternoon while the opportunity
presents itself. October live cattle are up $1.22 at $109.17, December live
cattle are up $1.80 at $113.45 and February live cattle are up $1.50 at
$116.52. The cash cattle market continues to be quiet, as feeders are becoming
keen on the notion of selling their cattle later in the week, and for higher
prices. The South has priced cattle at $108-plus, but the North has yet to
offer any initial asking prices for the week. If boxed beef prices can scale
upward (even if its modestly) stronger beef demand could help feeders achieve
another week of higher cash prices.
Boxed beef prices are higher: choice up $0.06 ($217.78) and select up $1.70
($208.12) with a movement of 72 loads (36.95 loads of choice, 17.27 loads of
select, 5.92 loads of trim and 12.34 loads of ground beef).
As corn prices weaken $0.02 to $0.04 per bushel, feeder cattle contracts
rally $2.00 to $3.00 higher taking full advantage of Tuesday's support. October
feeders are up $2.32 at $143.25, November feeders are up $3.07 at $144.17 and
January feeders are up $2.90 at $142.05. Seeing the cash cattle market rally
higher for the last two weeks has really helped build somewhat of a positive
mindset around the highly anticipated fall run of feeder cattle. There are
numerous bearish reasons as to why the market's fall run could fall short of
expectations (drought conditions, supply outweighing demand, and uncertainty
still playing a large role in the marketplace). But if the cash cattle market
can continue to gain leverage over the next two to four weeks, its positive
momentum could carry over into the feeder cattle market.
The cattle complex's rally is drawing attention away from the lean hog
market as traders questions the longevity of these prices. Heading into the
afternoon the lean hog contracts are $0.55 to $1.37 lower. Over the last three
weeks the lean hog market's rally has been tremendous, but without seeing
tremendous follow-through from the export side of things, the market wonders if
these prices are sustainable. There will be a lot of pressure on this week's
export report, which comes out on Thursday mornings. October lean hogs are down
$0.05 at $72.65, December lean hogs are down $1.47 at $62.55 and February lean
hogs are down $1.25 at $67.45.
The projected lean hog index for 9/28/2020 is up $0.49 at $75.91, and the
actual index for 9/25/2020 is up $0.89 at $75.42. Hog prices are lower on the
National Direct Morning Hog Report, down $0.49 with a weighted average of
$63.61, ranging from $60.00 to $65.00 on 5,499 head and a five-day rolling
average of $64.33. Pork cutouts total 240.10 loads with 218.83 loads of pork
cuts and 21.27 loads of trim. Pork cutout values: down $0.05, $93.34.
ShayLe Stewart can be reached firstname.lastname@example.org
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