DTN Midday Livestock Comments 08/02 11:41
Optimism Greets Week
Livestock contracts are optimistic so far through Monday's trade and, if
both pork cutouts and boxed beef prices can close higher, the optimism may
DTN Livestock Analyst
After closing in a dismal manner Friday afternoon, the livestock contracts
are back to the workplace ready to take on the new week. The lean hog market is
making the biggest advancements with the board fully supporting their upward
surge; now the market just needs to see a strong pork cutout close for packers
to support the cash hog market come Tuesday and Wednesday. December corn is up
9 1/2 cents per bushel and December soybean meal is up $4.80. The Dow Jones
Industrial Average is down 9.19 points and NASDAQ is up 47.38 points.
Live cattle futures are jumping into the new week with cautious optimism.
August live cattle are up $0.12 at $122.20, October live cattle are up $0.05 at
$127.25 and December live cattle are up $0.20 at $132.85. After last week's
night-and-day type differences (packers relishing the fact that boxed beef
prices were higher while feedlots only saw 77,000 head trade at mostly steady
prices) cattlemen and feedlot managers alike wonder how to capture some of this
pre-Labor Day excitement before it's come and gone. Technically speaking the
market has some upward potential as the market's nearest resistance looms at
$123.25. But moving the market above that point will take quite a bit of gusto.
But with that being said, higher boxed beef prices and continued, unwavering
consumer demand is a hard force to reckon with and feedlots plan to use that to
their advantage, if they are given the opportunity. Showlists this week are
somewhat lower in Kansas, lower in Texas but higher in Nebraska/Colorado.
Last week's negotiated cash cattle trade totaled 77,209 head. Of that 72%
(55,340 head) were purchased for the nearby delivery, while the remaining 28%
(21,869 head) were purchased for the following 15- to 30-day delivery.
Boxed beef prices are higher: Choice up $0.35 ($278.81) and select up $2.77
($261.96) with a movement of 54 loads (22.67 loads of choice, 7.44 loads of
select, 8.19 loads of trim and 15.41 loads of ground beef).
This week is going to be a big one for the feeder cattle market as Superior
Livestock Auction hosts their Video Royale sale in Winnemucca, Nevada, where
they are already working their way through selling roughly 184,000 head. With
many Western cow-calf producers being pushed to sell their calves earlier than
usual, a lot of producers have struggled to comfortably understand when they
should market their calves. This week's massive sale will help producers
understand what their calves are worth given the market's current state (fat
cattle prices, board's trajectory, and corn prices). August feeders are up
$0.37 at $158.55, September feeders are up $0.60 at $162.40 and October feeders
are up $0.72 at $164.77.
Lean hog futures may have closed doggishly Friday afternoon, but the market
is back to trading vibrantly come Monday. August lean hogs are up $1.12 at
$107.32, October lean hogs are up $1.65 at $89.67 and December lean hogs are up
$1.50 at $83.15. Packers haven't shown robust interest in the cash hog market
yet this week, but that's not unusual given how they've recently been waiting
until Tuesday or Wednesday to do the majority of their buying for the week.
Most important will be how the day's pork cutout value closes. If higher prices
are attainable, then packers may be even more eager than expected and want to
secure supplies ahead of Labor Day. But if prices droop lower, they may be
Hog prices are lower on the National Direct Morning Hog Report, down $0.66
with a weighted average price of $100.99, ranging from $100.00 to $102.00 on
3,108 head and a five-day rolling average of $102.99. Pork cutouts total 120.81
loads with 110.42 loads of pork cuts and 10.39 loads of trim. Pork cutout
values: up $2.60, $126.49.
ShayLe Stewart can be reached at firstname.lastname@example.org
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