DTN Livestock Midday: Feeders Are Back at It

Continuing in Monday’s manner, the feeder cattle and live cattle contracts are back to rallying Tuesday amid lower corn prices.

GENERAL COMMENTS:

The strength that the feeder cattle contracts saw throughout Monday’s trade is again evident in Tuesday’s market as the contracts continue to push higher and higher. The excitement in the feeder cattle market is trickling into the live cattle arena. But given that the cash cattle market has yet to be tested this week, we don’t know if it will be enough support to offset the market’s weaker boxed beef prices.

July corn is down 4 3/4 cents per bushel, and July soybean meal is down $1.60. The Dow Jones Industrial Average is down 138.40 points, and the NASDAQ is down 83.93 points.

LIVE CATTLE:

As unbelievable as it may seem given that the market hasn’t seen much support over the last two months, the live cattle contracts are rallying well over $1 higher in the nearby contracts. The market’s decision to trade higher seems somewhat odd given the fact that boxed beef prices have just recently made a seasonal top and that they’re now trading lower.

But the support that’s spinning in the feeder cattle market has seeped over to the live cattle sector, and corn’s lower descent comes as a breath of fresh air. June live cattle are up $1.52 higher at $120.90, August live cattle are up $2 at $123.27, and October live cattle are up $1.55 at $128.35.

The cash cattle market has yet to see any business develop, but if the week follows the market’s recent trend some trade could begin to develop later this afternoon. Bids are elusive to the market at this point, but asking prices in the South have been noted at $122 plus, and in the North from $195 to $197.

Boxed beef prices are lower: choice down $0.80 ($334.67) and select down $4.78 ($298.63) with a movement of 69 loads (32.88 loads of choice, 22.04 loads of select, 11.29 loads of trim and 2.88 loads of ground beef).

FEEDER CATTLE:

The feeder cattle contracts have waited a long time since they last saw the market trade higher. August feeders are up $2.60 at $157.20, September feeders are up $2.25 at $159.07 and October feeders are up $2.12 at $60.70. The market’s strength is solely rallying off the fact that the corn market is trading lower.

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High input costs are plaguing the entire beef sector, from the high price of grass to the growing price of hay. And, of course, the sharply high corn prices make it hard for anyone’s math equation to find a profitable outcome given the current market environment.

If this upward momentum could hold at least steady throughout the week, it’s very likely that the Superior’s Corn Belt Classic could see some excited buyers. But just as the market can trade higher, a change in the corn market could weaken the market’s hopeful trajectory.

LEAN HOGS:

Despite the starkly higher cash hog prices and the higher pork cutout values, the lean hog contracts aren’t willing to turn and trade higher just yet. With the contracts trading at levels not seen since 2014, traders want to be certain (C.E.R.T.A.I.N) that the demand seen in the market is indeed going to trend throughout the week before they move their positions in support.

July lean hogs are down $0.40 at $117.82, August lean hogs are down $0.87 at $113.92 and October lean hogs are down $0.87 at $93.95. Tuesday’s slaughter is estimated at 483,000 head, which would be a strong day for the market.

The projected lean hog index for 6/14/2021 is up $0.75 at $122.66, and the actual index for 6/11/2021 is up $1.05 at $121.91. Hog prices are sharply higher on the National Direct Morning Hog Report, up $10.69 with a weighted average of $121.38, ranging from $110.43 to $136.00 on 4,970 head and a five-day rolling average of $114.30. Pork cutouts total 195.48 loads with 176.03 loads of pork cuts and 19.45 loads of trim. Pork cutout values: up $3.58, $132.26.

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