DTN Midday Livestock Comments 10/23 12:06
Cattle Contracts Higher; Lean Hogs Lower
Both cattle contracts are showing positive support as the noon hour
approaches, while lean hog contracts continue to struggle.
By ShayLe Stewart
DTN Livestock Analyst
Cattle contracts have welcomed Wednesday's market with moderate gains in
both the live cattle and feeder contracts while the lean hog market struggles.
As Wednesday's session continues, more questions start to surface. Why are fat
cattle trading early in the week with the board showing signs of strength and
knowing that the Cattle on Feed Report doesn't come out until Friday afternoon?
One would think that cattlemen, well knowing that they are in no rush to sell
cattle because of increasing carcass weights and knowing that packers are
profiting off of the growing boxed-beef values, would gravitate to their
perpetual rewarding system of waiting to trade cattle later in the week. Pour
another cup of coffee, dust your eyeballs and keep watching, because this week,
though assumed to be uninteresting, has some strange moving parts. December
corn is down 1 1/2 cents per bushel and December soybean meal is up $1.30. The
Dow Jones Industrial Average is up 13.13 points, and the NASDAQ is up 1.32
Wednesday's live cattle board has shaped up to be something noteworthy. The
board continues to ping as more and more interest grows in the December and
early 2020 contracts. December live cattle are capturing the highest gains at
$115.20, up $1.50, and all other contracts have positive support ranging from
$0.02 to $1.10.
A string of cattle have been reported sold in eastern Nebraska at $109 live,
about $1.00 lower than last week's weighted average. A few live deals have been
reported in Kansas also at $109, $1.00 higher than last week's weighted
average. Most asking prices remain firm around $110 plus in the South and $178
in the North. The Fed Cattle Exchange Auction reported 231 head of cattle
Wednesday, with 1 lot in Kansas and Texas each. Asking prices were at $105, but
quickly ticked higher on the Texas lot of 131 head they sold at $109. The
Kansas lot of 100 head was bid at $105, but the offer was passed. It will be
interesting to see if more trade picks up early this week or waits for the
Cattle on Feed Report to come out before most of the action takes place. If
Wednesday can close with the gains the market currently has, good things could
be in store for the cash market.
Midday boxed beef cutouts are higher: choice up $2.46 ($223.39) and select
up $0.50 ($198.50). Wednesday's midday boxed beef movement totals only 69 loads
(26.80 loads of choice cuts, 23.08 loads of select cuts, 3.94 loads of trim and
14.70 loads of ground beef).
Strong gains have been captured in the feeder cattle market with all
contracts securing $0.80 to $1.10 gains. November feeder cattle are up $0.90 at
$144.40, and the most market interest has shifted from the November live cattle
contract to the January 2020 contract.
Not every market can be a Wednesday winner, as the lean hog sector struggles
to find support. At some point, the tide will change and the losses from the
disease outbreak will help support the domestic lean hog market, but until
there is a trade deal with China and export opportunity, the market sits. The
December lean hog contract is the only contract trading higher, up $0.20 at
$65.70, while the months of February, April, May and June 2020 take the biggest
losses -- down $1.30 to $1.80.
The projected lean hog index for 10/22/19 is $65.72, up $0.25, and the
actual lean hog index for 10/21/19 is $65.47, down $0.05. Prices are lower on
the National Direct Morning Hog Report, down $0.64 with a weighted average of
$55.21, ranging from $51.00 to $56.01 on 7,535 head sold and a five-day rolling
average of $56.45. Pork cutouts totaled 170.26 loads with 143.36 loads of pork
cuts and 26.90 loads of trim. Pork cutout values are down $0.32 at $75.78.
ShayLe Stewart can be reached firstname.lastname@example.org
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