DTN Livestock Midday: Cattle Futures Lead Upward Shift

Gains moved into all cattle futures Thursday morning with triple-digit rallies in nearby live and feeder cattle contracts. Hog futures are showing limited losses as traders still are searching for longer-term stability following the wide market swings over the last month.

GENERAL COMMENTS:

Triple-digit gains in live and feeder cattle futures have sparked renewed interest. December live cattle futures and November feeder cattle contracts are gaining the most attention as this is where the majority of commercial trade is focused. The ability to hold current price ranges through the end of trade Thursday may solidify additional buyer support in upcoming days.

Hog futures continued to erode Thursday morning, although limited trade activity has kept prices moderate at midday.

December corn is up 3 cents per bushel and December soybean meal is up $2.30 per ton. The Dow Jones Industrial Average is up 506 points with Nasdaq up 244 points.

LIVE CATTLE:

Higher prices moved back into live cattle futures Thursday, following the firm pullback seen Wednesday. December contracts are leading the complex higher with a $1.45 per cwt rally. This has moved October prices back above $125 per cwt, and December futures over $130. The ability to hold prices at these levels through the end of the week will go a long way in helping spark additional buyer support during the second half of October.

Cash cattle markets are quiet Thursday morning with bids unavailable in all areas. Wednesday saw light to moderate cash trade in most areas with prices steady with last week. Thus, there seems to be very little urgency to make additional deals. Asking prices remain at $125 to $126 live basis in the South and $198 and higher in the North.

Given the amount of trade reported at midweek, at least some additional sales are expected to develop over the next two days. But the bulk of needed business may be done in all areas and this could have already set the tone for prices. The special Fed Cattle Exchange Auction which was scheduled for Thursday morning was paused during the middle of the sale due to technical difficulties.

At the time of the sale pause, no sales have been reported. Thursday morning’s boxed beef prices are higher in moderate trade, with choice cuts $0.67 higher at $280.69 and selects up $2.35 at $261.05 on a total count of 71 loads. Dow Jones estimated Thursday’s cattle slaughter at 120,000 — 1,000 less than a week ago and 2,000 more than year ago levels.

FEEDER CATTLE:

Feeder cattle futures followed the upward shift in live cattle contracts with November leading the charge, holding a $1 per cwt gain at midday. Uncertainty remains as to just how demand shifts in beef markets will impact overall feeder cattle trade. But the recent pressure in corn and focus on year-over-year cattle supply losses is helping feeder cattle futures focus on tighter overall supply levels well into 2022.

Limited late-day trade is expected in most contract months, which could allow prices to hover within current ranges. The CME Feeder Index was priced at $154.26 for Oct. 12.

LEAN HOGS:

Follow-through pressure slowly but steadily developed across lean hog futures. Nearby futures are holding 40- to 55-cent losses, although trade volume remains generally light. Following the late September market rally, the entire lean hog futures complex has been steadily pulling back from elevated price levels.

Market stability is expected to be seen somewhere between the extreme early September lows and late September highs. But so far it has taken nearly half of October to get to that point. Even though pork supply levels remain lower than expected, the uncertainty as to how robust pork demand will be the remainder of 2021 and all of 2022 is creating concern for traders and pointing to additional selling pressure.

Cutouts are up $5.64 at $110.49 Thursday morning on 258.66 loads. Negotiated hog prices are $0.28 lower at $67.85 per cwt on 5,877 head. The swine/pork market formula price is listed at $87.00 per cwt. Dow Jones estimated Thursday’s hog slaughter at 477,000 — 1,000 less than a week ago and 4,000 less than year ago levels. The CME Lean Hog Index is listed at $88.82 per cwt for Oct. 13.

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