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DTN Midday Livestock Comments 01/22 12:04
Livestock Contracts Burst with Support
It may have been a rough start to the New Year for the livestock contracts
but with a little bit of patience the contracts have found ample demand through
Friday's trade.
ShayLe Stewart
DTN Livestock Analyst
General Comments
Traders are pouring the coals to the livestock contracts as the market's
fundamental backing is helping ignite this impressive rally through Friday's
trade. The strength in the feeder cattle market continues to grow and grow.
Some nearby contracts are capturing gains $3.00 to $4.00 higher than Thursday's
levels. With this much support filtrating throughout the marketplace, it would
be the icing on the cake to have Friday's afternoon Cattle on Feed Report come
out bullish and help this positive movement roll into next week's business.
March corn is down 17 1/2 cents per bushel and March soybean meal is down
$10.70. The Dow Jones Industrial Average is down 83.71 points and NASDAQ is
down 5.40 points.
LIVE CATTLE
We've been hoping to see the April live cattle contract trade at $120 for
the last month but seeing the contract trade at $122.30 is even sweeter!
February live cattle are up $2.50 at $116.60, April live cattle are up $2.37 at
$122.30 and June live cattle are up $1.57 at $118.70. As the market shoots to
either long-term highs or completely new contract highs, the live cattle market
is being met with extraordinary demand from all sides of the market other than
this week's cash cattle trade. If the Cattle on Feed Report that is scheduled
to come out this afternoon can lend an additional hand in the market's current
upward swing by showing lighter placements - the market stands a good chance to
carry this strength into the weeks to come. The countryside remains
lackadaisical without bids surfacing and its looking like the bulk of the
week's cash cattle trade is done and over.
Beef net sales of 24,500 mt reported for 2021, increases were primarily for
Japan (4,900 mt, including decreases of 500 mt), China (4,300 mt, including
decreases of 100 mt) and South Korea (3,500 mt, including decreases of 600 mt).
Boxed beef prices are higher: choice up $1.85 ($223.05) and select up $3.24
($213.52) with a movement of 85 loads (45.14 loads of choice, 18.24 loads of
select, 8.05 loads of trim and 13.67 loads of ground beef).
FEEDER CATTLE
The feeder cattle contracts had a long and grueling, painful entrance into
2021 but low and behold the momentum that has become available this week is
powerful for the feeder cattle contracts. January feeders are up $1.60 at
$137.47, March feeders are up $4.30 at $143.52 and April feeders are up $3.55
at $145.42. Some of the market's support is stemming from the correction in
corn prices, but then again, the technical support the market has mustered up
is nothing to overlook as contract highs are being made in all of the feeder
cattle contracts from April 2021 through November 2021. If Friday can keep this
momentum through closing the feeder cattle complex stands a great chance
carrying this supportive trend into next week's trade.
LEAN HOGS
Thankfully while the cattle contracts leap higher, the lean hog contracts
are met with strong acquisition in their nearby contracts too. February lean
hogs are up $1.17 at $69.27, April lean hogs are up $1.60 at $75.50 and June
lean hogs are up $1.00 at $86.27. Packers may have bought a plethora of hogs
midweek, but they've came back to the cash market willing to buy more hogs and
even willing to give higher prices for them. and last but certainly not least,
the support from the strong pork cutout value is incredibly helpful again as
the board is met with strong signals to trade higher and no hesitant is
weighing the contracts down.
Pork net sales of 45,200 mt reported for 2021, increases primarily for
Mexico (13,200 mt, including decreases of 800 mt), China (9,700 mt, including
decreases of 1,100 MT), Canada (5,000 MT, including decreases of 400 mt) and
the Philippines (4,500 mt, including decreases of 800 mt).
The projected lean hog index for 1/21/2021 is up $0.15 at $65.55, and the
actual index for 1/20/2021 is down $0.27 at $65.40. Hog prices are higher on
the National Direct Moring Hog Report, up $0.87 with a weighted average of
$55.56, ranging from $50.75 to $56.00 on 3,300 head and a five-day rolling
average of $55.56. Pork cutouts total 229.29 loads with 208.76 loads of pork
cuts and 20.52 loads of trim. Pork cutout values: up $3.64, $83.90.
ShayLe Stewart can be reached shayle.stewart@dtn.com
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