DTN Livestock Midday: Lean Hogs Trading Fully Higher

Photo: Blair Fannin, Texas AgriLife Extension

Livestock futures are trading in completely opposite directions as the cattle contracts can’t muster up any support while the lean hog contracts take the day in stride.

GENERAL COMMENTS:

Cattle futures continue to trade unsupported and doggishly; traders aren’t willing to invest in the contracts until better fundamental support develops. Lean hog futures continue to trade higher, taking the day in stride as both higher pork cutout values and a strong cash hog market encourage the upward push. May corn is down 8 3/4 cents per bushel and May soybean meal is down $2.90. The Dow Jones Industrial Average is up 622.76 points and NASDAQ is up 317.20 points.

LIVE CATTLE:

Live cattle futures can finally see eye-to-eye with the April contract as last week the February contract expired. April live cattle are down $0.80 at $119.22, June live cattle are down $0.87 at $117.55 and August live cattle are down $0.57 at $116.47. With last week’s disappointing cash trade unable to break above $114, morale throughout the live cattle sector has lessened. Thankfully feedlots are relentless and are expected to price their cattle fully higher again this week.

With boxed beef prices being the second highest they’ve ever been for this time, and live cattle prices being the lowest for late February/early March in the last ten years, feedlots are sick and tired of these prices and are going to demand the market pay dividends here shortly. Thankfully the closer and closer the market gets to the second quarter, the supplies of readily available fed cattle begin to dwindle, which will favor the feedlots’ position. Showlists this week are higher in Texas, but lower in Kansas, Colorado and Nebraska.

Boxed beef prices are higher: choice up $0.45 ($240.98) and select up $1.69 ($231.42) with a movement of 35 loads (20.23 loads of choice, 5.80 loads of select, zero loads of trim and 9.19 loads of ground beef).

FEEDER CATTLE:

As feeder cattle futures continue to feel pressure from a strong corn market and the lack of packer interest in the cash cattle market, feeder cattle contracts are left with few options but to trade lower. March feeders are down $1.45 at $137.22, April feeders are down $1.37 at $141.20 and May feeders are down $1.17 at $143.90. Until the market sees a surge in cash cattle prices, cattle buyers’ hands are tied as they can’t afford to buy cattle high and then sell them low with cost of gains being at or above $1.00 per day.

LEAN HOGS:

Following last week’s weaker close, lean hog futures had a lot of eyes watching their movement Monday morning as many wondered if the market’s top was finally in. But as the lean hog contracts have done time and time again since the beginning of the year, the market trudged into this week’s trade fully higher, looking to take more if the market will support its ambition. April lean hogs are up $1.40 at $88.55, June lean hogs are up $1.57 at $95.75 and July lean hogs are up $0.97 at $95.52. Seeing that the market has grown to such elevated levels, and that fundamental support has been hit or miss over the last few trading days, leaves one to believe the market will be seeing a correction sooner rather than later.

The projected CME Lean Hog Index for 2/26/2021 is up $1.20 at $81.90 and the actual index for 2/25/2021 is up $0.75 at $80.70. Hog prices are higher on the National Direct Morning Hog Report, up $0.68 with a weighted average of $77.96, ranging from $73.00 to $84.00 on 4,678 head and a five-day rolling average of $75.08. Pork cutouts total 151.88 loads with 125.69 loads of pork cuts and 26.19 loads of trim. Pork cutout values: up $1.51, $95.35.

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