DTN Livestock Midday: Cattle Still Sour About Grain Market’s Rally

    ©Debra L Ferguson Stock Photography

    Some cash cattle trade has been reported in the South at steady prices, but Northern cattle are trading steady to $1.00 lower than last week.

    GENERAL COMMENTS:

    Cattle contracts are still licking their wounds from Tuesday’s aggressive jump in the grain markets. The cash cattle market has begun to trade and packers have purchased cattle steady to $1.00 lower than last week’s average. While the cattle complex may be suffering, lean hog futures are rallying as support bolsters the market from nearly every aspect.

    March corn is down 7 1/2 cents per bushel and March soybean meal is down $3.80. The Dow Jones Industrial Average is up 127.04 points and NASDAQ is down 172.63 points.

    LIVE CATTLE:

    Packers won the psychology battle of the week as they’ve been able to pick up some cattle in the North for $220 (which is steady to $1.00 lower than last week’s business) and some Southern cattle have traded at $138 (which is fully steady).

    Even though fat cattle shouldn’t technically be influenced by the corn market, the contracts are woven together and what wounds one usually affects the other when it comes to the live cattle and feeder cattle futures.

    Given that boxed beef prices are trending higher, feedlots may have been able to hold the market completely steady if they would have waited until later in the week to trade, but the onset of the sharply higher corn prices caught feedlots off guard. February live cattle are down $0.67 at $137.15, April live cattle are down $0.65 at $142.02 and June live cattle are down $0.55 at $137.10.

    Boxed beef prices are higher: choice up $0.65 ($267.47) and select up $1.16 ($260.39) with a movement of 111 loads (69.60 loads of choice, 17.66 loads of select, 9.85 loads of trim and 14.20 loads of ground beef).

    FEEDER CATTLE:

    Even though the corn and soybean markets are lower, the feeder cattle complex doesn’t feel confident trading higher after Tuesday’s blow. January feeders are down $0.47 at $162.20, March feeders are down $0.22 at $166.12 and April feeders are down $0.15 at $169.62. The feeder cattle contracts are going to depend heavily on the live cattle market for support in the weeks ahead.

    Thankfully feeder cattle sales were still aggressive Tuesday afternoon, but if corn keeps trading at $6.00 or trends higher (staying above $6.00/bushel is very likely) the buyers could grow weary of diving into any more feeders as their cost of gains have changed significantly.

    LEAN HOGS:

    After last week’s sell-off, the lean hog contracts are rallying into Wednesday’s noon hour with substantial support. February lean hogs are up $1.62 at $81.77, April lean hogs are up $1.67 at $88.67 and June lean hogs are up $1.22 at $99.50. The market is seeing support from nearly every angle as pork cutout values are higher, cash prices are higher, and the futures market is trading confidently.

    While last week the market was terrified about what Prop 12 might do to the marketplace, largely its looking like the market is managing just fine. Monitoring what Wednesday’s slaughter amounts too is important business for the afternoon as well as where pork cutout prices round the day out at.

    The projected CME Lean Hog Index for 1/4/2022 is up $1.12 at $73.87 and the actual index for 1/3/2021 is up $0.90 at $72.75. Hog prices are higher on the National Direct Morning Hog Report, up $5.14 with a weighted average of $66.90 ranging from $59.00 to $70.00 on 8,480 head and a five-day rolling average of $63.71. Pork cutouts total 175.41 loads with 158.01 loads of pork cuts and 17.40 loads of trim. Pork cutout values: up $7.96, $93.43.

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