Cattle Contracts Look for Direction While Lean Hogs Gain Strength
Wednesday has been mostly quiet as the cattle contracts are mixed and cash cattle trade has yet to really develop.
Thus far Wednesday has been mostly uneventful on the board for the cattle contracts, but slowly the lean hog sector is starting to transition to trading steadily higher. Wednesday’s Fed Cattle Exchange sparked some cash cattle trade as most of the sale’s offerings sold and the auction fully supports a higher trend for the trade left to develop this week. December corn is up 1 1/2 cents per bushel and December soybean meal is down $0.70. The Dow Jones Industrial Average is up 273.66 points and NASDAQ is up 28.75 points.
Sitting quietly through most of Wednesday morning, live cattle contracts are mixed. Nearby contracts dip $0.07 to $0.32 lower while some deferred contracts rally $0.10 to $0.17 higher. As the market plays cat and mouse, trading mostly steady, the market looks for a stable sense of direction as mixed signals seem to be all that the market has at midday. Cash cattle prices have the opportunity to trade higher, but packers are reluctant to be overly aggressive. There are a few bids on the table in Nebraska, but the country still remains fairly quiet.
The Fed Cattle Exchange Auction listed a total of 1,474 head, with 1,400 actually sold, and 74 head listed as unsold. The state-by-state breakdown looks like this: Kansas 350 total head, with 276 head sold at $100.00, 74 head unsold; Texas 788 total head, all of which sold at $99.75-$100.00; Oklahoma 336 total head, all of which sold at $100.00. The delivery date/weighted averages breakdown is as listed: 1-9-day delivery: 960 head total, all sold with a weighted average price of $99.95; 1-17-day delivery 514 head total, of which 440 head sold, with a weighted average price of $100.00.
Boxed beef prices are mixed: choice down $0.58 ($203.66) and select up $0.56 ($191.01) with a movement of 84 loads (47.55 loads of choice, 17.29 loads of select, 3.54 loads of trim and 15.21 loads of ground beef).
Feeder cattle futures are battling modest pressure in nearby contracts while the deferred contracts are able to trade somewhat higher. August feeders are down $0.42 at $144.27, September feeders are down $0.50 at $146.12 and October feeders are down $0.25 at $146.82. The market’s recent run of higher prices could be topping out as the momentum that fueled the rally seems to be lacking consensus and support.
Generating support and moving contracts $0.12 to $1.02 higher has been a refreshing change of pace for the lean hog complex. August lean hogs are down $0.15 at $49.55, October lean hogs are up $0.45 at $49.47 and December lean hogs are up $0.95 at $51.52. The lean hog complex hasn’t been able to break out of its mundane sideways trade as traders have little interest in the market. But as cattle contracts seem to be stepping to the sidelines for the day at least, traders are looking to the hog contracts and seeing some potential.
The projected lean hog index for 8/3/2020 is down $0.30 at $52.81, and the actual index for 7/31/2020 is down $0.42 at $53.11. Hog prices are lower on the National Direct Afternoon Hog Report, down $0.10 with a weighted average of $38.65, ranging from $37.00 to $40.00 on 6,367 head and a five-day rolling average of $40.25. Pork cutouts total 213.63 loads with 179.99 loads of pork cuts and 33.64 loads of trim. Pork cutout values: up $3.21, $68.71.