DTN Midday Livestock Comments 01/27 11:47
Livestock Futures Chopping Sideways
The livestock complex is trading in an unenthused manner Thursday.
DTN Livestock Analyst
Neither the live cattle nor lean hog contracts are overly thrilled with
Thursday's export report, even though the report unveiled a lukewarm finding.
With the lag in processing speeds, it's hard for either market to get excited
about anything for the time being. March corn is down 2 1/2 cents per bushel
and March soybean meal is up $2.50. The Dow Jones Industrial Average is up
243.77 points and NASDAQ is down 19.94 points.
Live cattle futures are trading without much excitement thus far Thursday,
moving mostly sideways. The cash cattle market isn't finding much more
interest, despite only selling a small sampling of cattle. February live cattle
are down $0.07 at $137.98, April live cattle are down $0.02 at 4141.87 and June
live cattle are down $0.15 at $136.90. While this week's market has been
hit-or-miss on support from traders, it's important to keep a long-term
perspective. The live cattle complex has taken mostly a defensive position as
the market hates seeing feedlots lose currentness, hates seeing cash cattle
trade lower and despises the fact that processing speeds are lagging. But 99%
of the time, fundamentals end up winning the coin toss and in the next couple
of months it's going to be undeniably apparent that supplies are sparse. In the
meantime, feedlots and cattle enthusiasts are trying to cling to whatever
market position they can hold onto before things become favorable once again.
Beef weekly net export sales of 14,300 metric tons (mt) for 2022 were
primarily for South Korea (6,200 mt), Japan (3,900 mt) and Mexico (600 mt).
Boxed beef prices are lower: choice down $1.03 ($288.43) and select down
$0.38 ($279.34) with a movement of 65 loads (42.98 loads of choice, 9.93 loads
of select, 5.19 loads of trim and 6.52 loads of ground beef).
Feeder cattle futures are not having a rock 'n roll day as the market merely
skips sideways, waiting for a strong signal that would either send the market
higher or lower. In the meantime, the live cattle complex isn't lending much
support as its contracts are trading lower along with a lower boxed beef
market. On the corn front, the corn contracts are trending mildly lower, but
given that the complex is still trading around $6.25 per bushel, the feeder
cattle contracts aren't comfortable with its price point. March feeders are
down $0.50 at $160.30, April feeders are down $0.52 at $165.67 and May feeders
are down $0.20 at $169.92.
After rallying aggressively earlier in the week, the lean hog complex is
struggling to find any support Thursday. February lean hogs are down $1.12 at
$86.90, April lean hogs are down $2.12 at $94.32 and June lean hogs are down
$1.60 at $104.87. After such an ambitious rally over the last two weeks, it's
not surprising to see the lean hog market stabilizing and catching its breath
as the complex looks for added support in its long-term quest. Pork cutout
values have pinged higher and lower throughout the week, which hasn't added
strong support. And, while the cash market has been mostly supportive, without
processing speeds at full capacity, it's hard to get overly excited on the cash
front. The market does find some peace in seeing China as a buyer in Thursday's
Pork net export sales of 49,100 mt for 2022 were primarily for Mexico
(17,300 mt), China (16,900 mt) and Canada (3,000 mt).
The projected CME Lean Hog Index for 1/26/2022 is up $0.55 at $79.75, and
the actual index for 1/25/2022 is up $0.75 at $79.20. Hog prices are higher on
the National Direct Morning Hog Report, up $5.83 with a weighted average of
$68.64, ranging from $62.00 to $83.00 on 3,578 head and a five-day rolling
average of $63.34. Pork cutouts total 130.53 loads with 111.91 loads of pork
cuts and 18.63 loads of trim. Pork cutout values: up $6.05, $100.65.
DTN Livestock Analyst ShayLe Stewart will be at the NCBA convention in
Houston Feb. 1-3. Stop by the DTN/Progressive Farmer booth and meet her.
ShayLe Stewart can be reached at email@example.com
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