DTN Midday Livestock Comments          08/11 12:14

   Traders Pay Up for Livestock

   A cash market for fed cattle that's $2 higher than last week, plus ongoing 
scarcity of feeder cattle and none-too-ample supplies of market-ready hogs all 
support the persistent bullishness in livestock futures Thursday. 

Elaine Kub
Contributing Analyst

GENERAL COMMENTS:

   A cash market for fed cattle that's $2 higher than last week, plus ongoing 
scarcity of feeder cattle and none-too-ample supplies of market-ready hogs all 
support the persistent bullishness in livestock futures Thursday. Outside 
markets are churning higher, too. September corn is up 6 3/4 cents per bushel 
and August soybean meal is up $10.20 per ton. The Dow Jones Industrial Average 
is up 191 points and NASDAQ is up 24 points.

LIVE CATTLE:

   Live cattle futures are moving up again Thursday morning, taking the October 
contract up $0.85, for instance, to $145.325. This isn't a new contract high 
yet ($147.50 from April 2022), but with bullishness in the outside markets and 
the underpinning of a strong cash market this week, traders may be setting 
their sights in that direction. The all-time high on the continuous live cattle 
futures chart was $171.975 back in October 2014, so there is a bit of headroom 
still. The cash market traded Wednesday with relatively light numbers of 
Nebraska and Iowa cattle at mostly $229, roughly $2 higher than last week's 
weighted average. A light trade is being reported Thursday in the South at 
$140, roughly $3.50 to $4.50 higher than last week's weighted averages. Weekly 
export sales of 14,600 metric tons (mt) of beef were up 22% from the previous 
week, but down 17% from the prior four-week average, which just goes to show 
what the pace has been lately. Thursday's cattle slaughter is projected at 
125,000 head, which is even with week-ago numbers and 9,000 more than year-ago 
numbers.

   Boxed beef prices are higher: choice up $0.49 Thursday morning ($263.72) and 
select up $1.61 ($238.69) with a movement of 62 total loads (33.13 loads of 
choice, 16.01 loads of select, 0 loads of trim, and 13.31 loads of ground beef).

FEEDER CATTLE:

   Feeder cattle futures have been the weak spot on the quote sheet off-and-on 
Thursday morning, which should be no surprise when the feed markets are on 
another tear, but some contracts are posting light gains as we approach the 
noon hour. The August contract is down $0.325 at $180.35, the September 
contract is up $0.20 at $185.20, and the October contract is up $0.10 at 
$187.275. Soybean meal, up $10 per ton Thursday morning, is emphatically 
regaining its normal premium over DDGS and pricing itself out of many livestock 
feed rations but dragging the whole feed grains sector with it along the way. 
With not many deals to be had from that side of the cattle input equation, calf 
buyers will have to try to pressure the market any other way they can, but 
given the beef and dairy herds' supply numbers, that could be like squeezing 
blood from a stone.

LEAN HOGS:

   Even with fairly light gains so far Thursday morning, the nearby lean hog 
futures contract is staying above $122 per cwt (up $0.05) and the October 
contract has stayed mostly above $101 per cwt, extending an upward trend that 
has added $10 to these contracts since early July. Sturdy pork cut-out values 
(now above $125 again) and lighter supplies of lighter hogs support the recent 
bullishness. This week's export sales report, however, may be a reminder that 
buyers may eventually become sensitive to higher pork prices. Net sales of 
21,500 mt were a disappointment: down 31% from the previous week and down 6% 
from the prior four-week average. Soybean meal is surging higher again Thursday 
morning by as much as $10 per ton to $525 per ton. Thursday's hog slaughter is 
projected at 471,000 head, which is 3,000 more than week-ago numbers and 6,000 
more than a year ago.

   The CME Lean Hog Index from 8/9 was 122.09 (down $0.16) and the projected 
index for 8/10 is 121.86 (down $0.23). Pork cutouts Thursday morning total 
126.85 loads with 108.74 loads of pork cuts and 18.12 loads of trim. Pork 
cutout values: up $2.18, to $125.85.

   Elaine Kub, CFA is the author of "Mastering the Grain Markets: How Profits 
Are Really Made" and can be reached at masteringthegrainmarkets@gmail.com or on 
Twitter @elainekub.




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