DTN Midday Livestock Comments 06/24 11:42

DTN Midday Livestock Comments          06/24 11:42

   Hogs Brace Themselves Ahead of Quarterly Report 

   Feeder cattle futures could care less that the live cattle and lean hog 
contracts are skeptical; when corn trades lower feeders find themselves an 
opportunity and capitalize on it. 

ShayLe Stewart
DTN Livestock Analyst


   Feeder cattle futures are the only livestock contracts really taking full 
advantage of Thursday's support as both live cattle and lean hog contracts have 
contradicting signals to manage. Heading into Thursday afternoon the market 
will be anxious to see what USDA's quarterly Hogs and Pigs report yields and 
what cash cattle trade develops into. July corn is down 9 1/2 cents per bushel 
and July soybean meal is down $4.40. The Dow Jones Industrial Average is up 
238.64 points and NASDAQ is up 135.88 points.


   Live cattle futures are caught between a rock and hard spot as the market 
likes the idea of trading higher but doesn't feel like the nearby contracts can 
do so considering the undeveloped cash cattle market. The hype surrounding the 
feeder cattle rally given the lower trending corn market has allowed for some 
of the deferred live cattle contracts to rally; but nearby contracts are 
skeptical. August live cattle are down $0.35 at $122.52, October live cattle 
are steady at $128.17 and December live cattle are up $0.17 at $131.67. If the 
technical side of the market can trade fully higher, it may add enough pressure 
to the cash cattle market to persuade packers into paying at least $1.00 higher 
if not more. There are a few scattered bids on the table thus far but largely 
the market is still oddly quiet. There's been a few cattle trade in Nebraska at 
$126 Thursday morning but otherwise the market's yet to see any substantial 
trade develop.

   Beef net export sales of 16,900 metric tons (mt) reported for 2021 were up 
31% from the previous week, but down 3% from the prior four-week average. The 
three largest buyers were South Korea (6,700 mt), Japan (4,000 mt) and China 
(1,600 mt).

   Boxed beef prices are mixed: choice down $4.19 ($307.86) and select up $1.00 
($276.41) with a movement of 70 loads (40.21 loads of choice, 13.35 loads of 
select, 10.29 loads of trim and 6.57 loads of ground beef).


   The feeder cattle market is thankfully trading higher amid a lower trending 
corn complex. It is also savoring the sweet essence of higher trade as Northern 
is hosting their Early Summer Special sale Thursday. August feeders are up 
$1.10 at $156.80, September feeders are up $0.85 at $158.92 and October feeders 
are up $0.87 at $160.85. The market is indeed trending higher but is still 
timid of pushing past the resistance in the spot August contract at $162.00.


   Ahead of Thursday afternoon's quarterly Hogs and Pigs report, the lean hog 
market is trying to trudge through another day of mixed market signals. The 
futures complex is seeing minor support creep into some of the  deferred 
contracts, but the nearby contracts are still feeling heavily pressured. July 
lean hogs are down $3.95 at $100.57, August lean hogs are down $1.20 at $99.52 
and October lean hogs are down $0.20 at $83.65. The volatility in the pork 
cutout values lives on as the morning's pork cutout report shared that the 
day's cutout was up $7.00. These violent swings are likely to be the market's 
tone until a bottom to this downward spiral is found.

   Pork net export sales of 28,600 mt reported for 2021 were down 2% from the 
previous week and 4% from the prior 4-week average. The three largest buyers 
were Mexico (11,500 mt), Canada (5,200 mt) and Japan (3,200 mt).

   The projected CME Lean Hog Index for 6/22/2021 is down $1.14 at $119.59, and 
the actual lean hog index for 6/21/2021 is up $0.05 at $120.73. Hog prices are 
lower on the National Direct Morning Hog Report, down $6.61 with a weighted 
average of $116.33, ranging from $110.00 to $125.00 on 4,615 head and a 
five-day rolling average of $119.10. Pork cutouts total 163.02 loads with 
143.96 loads of pork cuts and 19.05 loads of trim. Pork cutout values: up 
$7.00, $114.82.

   ShayLe Stewart can be reached at shayle.stewart@dtn.com

(c) Copyright 2021 DTN, LLC. All rights reserved.

© 2021 CHS Inc.