DTN Midday Livestock Comments 01/18 11:50
Cattle Bleed Lower on Processing Concerns
The cattle complex is worried about processing speeds as the market looks at
its third week of lower chain speeds.
DTN Livestock Analyst
The cattle contracts are having a tough start to the week as a lag in
production could hinder the market's ability to rally. Meanwhile, the lean hog
contracts are seeing support growing stronger in their nearby contracts as the
market crosses its fingers for more export opportunities. March corn is down 2
cents per bushel and March soybean meal is down $13.10. The Dow Jones
Industrial Average is down 562.77 points and NASDAQ is down 303.37 points.
Pressure lies over the live cattle market as the industry desperately wants
to see production speeds back up to a normal level; this is the third week of
reduced speeds. February live cattle are down $0.25 at $137.72, April live
cattle are down $0.20 at $141.92 and June live cattle are down $0.42 at
$137.20. Unfortunately, there has been a handful of sales noted in the South
for $137, which is $1.00 to $1.50 lower than last week's business. If
processing speeds don't gain momentum this week, it's likely packers will get
cattle bought for softer prices as they regain leverage in the cash cattle
Last week's negotiated cash cattle trade totaled 61,172 head. Of that 74%
(45,559 head) were committed for nearby delivery, while the remaining 26%
(15,613 head) were committed for deferred delivery.
Boxed beef prices are higher: choice up $1.43 ($289.29) and select up $0.78
($277.83) with a movement of 77 loads (34.86 loads of choice, 10.51 loads of
select, 10.34 loads of trim and 20.93 loads of ground beef).
The feeder cattle market is treading lightly through Tuesday as the market
isn't expecting to see as many calves and feeders run through this week's
market. While the grain markets are trending lower, the live cattle market
isn't sitting in a strong enough position to lend any support. March feeders
are down $0.87 at $165.50, April feeders are down $0.80 at $169.50 and May
feeders are down $0.70 at $172.02. It wouldn't be surprising to see the less
interest in feeders and calves this week as order buyers aggressively procured
the cattle they needed the last two weeks. Also, with the market's uncertainty
in the packing sector, buyers could opt out of aggressively purchasing until
they have a better understanding of the market's trajectory.
The lean hog complex is seeing more and more interest develop in nearby
contracts as the day trades on. February lean hogs are up $0.12 at $81.02,
April lean hogs are up $0.60 at $89.05 and June lean hogs are up $0.40 at
$100.30. Pork cutout values are up slightly and with African swine fever
continuing to plague various European countries, the hope is the U.S. will get
more export demand.
The projected CME Lean Hog Index for 1/17/2022 is up $0.88 at $76.78, and
the actual index for 1/14/2022 is up $1.58 at $75.90. Hog prices are
unavailable due to confidentiality, but we are able to see that 3,820 head have
traded and the five-day rolling average now sits at $64.28. Pork cutouts total
175.27 loads with 161.39 loads of pork cuts and 13.88 loads of trim. Pork
cutout values: up $1.79, $93.73.
ShayLe Stewart can be reached email@example.com
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