DTN Midday Livestock Comments 07/06 11:38
Cash Cattle Market Sits Like a Ghost Town
The cash cattle market hasn't seen hardly any cattle trade at this point
and, given that showlists are current, feedlots could wait until Thursday to
trade cattle as they possess enough leverage to do so.
DTN Livestock Analyst
Heading into Wednesday afternoon, the lean hog market is trading higher as
the complex rallies on strong cash demand and adequate buying from consumers.
The cash cattle market has yet to see cattle trade and it's looking like
business could wait to develop until Thursday as packers and feedlots go to
war. December corn is down 6 cents per bushel and December soybean meal is up
$1.00. The Dow Jones Industrial Average is down 156.63 points.
The live cattle market is buying itself time, trading notably higher in its
nearby contracts, but realistically holding its breath as everyone waits to see
how this week's cash cattle market will pan out. Last week's packers weren't
very aggressive in the cash cattle market as they only bought 71,000 head of
cattle, but they do have cattle committed for both this week and next, which
alleviates some of their need to support the spot cash cattle market. Given
that feedlots sit with fairly current showlists, it's unlikely that this week's
market isn't just a flop. August live cattle are up $1.37 at $134.30, October
live cattle are up $1.12 at $139.60 and December live cattle are up $0.90 at
$144.95. The cash cattle market has seen very few cattle trade at this point as
packers hope to get cattle bought at no higher price than steady money, but
feedlots seem to be holding out for more. It's quite possible that the market
doesn't see cattle trade Wednesday and that business holds out until Thursday.
Boxed beef prices are higher: choice up $3.58 ($268.24) and select up $2.05
($241.92) with a movement of 67 loads (33.35 loads of choice, 16.41 loads of
select, 5.28 loads of trim and 11.49 loads of ground beef).
The feeder cattle market is trailing modestly higher into Wednesday's
afternoon, but given how the corn market has merely fallen out of bed over the
last week, one would suspect that the feeder cattle market would be running
higher. August feeders are up $0.40 at $173.10, September feeders are up $0.60
at $176.70 and October feeders are up $0.85 at $179.82. Some sale barns are
hosting sales Wednesday but come Thursday and Friday, the market will be back
to a normal schedule, but given that runs have been sizeable over the last two
weeks, receipts could be thin through the rest of July as the heat deferrers
producers from wanting to transport livestock.
The lean hog complex continues to be aggressive in Wednesday's market as
sufficient buying over the Fourth of July weekend has retailers looking to
restock their shelves. The contracts are trending mostly higher into
Wednesday's afternoon as the market is being strongly supported by tremendous
fundamental support in the form of a sharply higher cash market. Yes, pork
cutout values are lower at midday, but it's the afternoon's data that matters.
Packers have been caught in the middle of a predicament in hog land as they're
obviously short bought and paying the price of relatively limited supplies as
cash prices again jump $7.28 but packers don't seem to care as they've already
bought 12,336 for the day. Hog producers probably enjoyed the fireworks over
the weekend, but the dynamite market that's developed early this week may be a
tough show to beat. July lean hogs are up $1.30 at $113.45, August lean hogs
are up $3.15 at $109.10 and October lean hogs are up $2.42 at $91.82.
The projected lean hog index for July 5 is down $0.65 at $109.93, and the
actual index for July 1 is down $0.12 at $110.58. Hog prices are higher on the
Daily Direct Moring Hog Report, up $7.28 with weighted average of $121.16
ranging from $112.00 to $127.00 and with a movement of 12,336 head and a
five-day rolling average of $117.83. Pork cutouts total 171.20 loads with
148.98 loads of pork cuts and 22.22 loads of trim. Pork cutout values: down
ShayLe Stewart can be reached firstname.lastname@example.org
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