DTN Closing Livestock Comment 09/18 15:53
Cattle Contracts Secure Late Gains Friday
Friday's trade was worth watching as cash cattle trade jumped higher yet
again and allowed the cattle contracts to close stronger.
DTN Livestock Analyst
Earlier this week it seemed like the week's sole attention was going to
align with the lean hog complex, leaving the cattle complex to drift merely
lower. But as the week's cash cattle trade developed for stronger money,
traders noticed the underlying support and upon Friday's $4.00 cash cattle
jump, the markets rallied. Hog prices closed lower on the National Direct
Afternoon Hog Report, down $2.35 with a weighted average of $60.26 on 8,722
head. December corn is up 3 1/4 cents per bushel and December soybean meal is
up $6.80. The Dow Jones Industrial Average is down 244.69 points and NASDAQ is
down 117.00 points.
From Friday to Friday, livestock futures scored the following changes:
October live cattle up $1.83, December live cattle up $1.95; September feeder
cattle up $0.88, October feeder cattle up $1.85; October lean hogs down $0.08,
December lean hogs down $2.48.
Upon seeing the strength in the cash cattle market, the live cattle complex
rallied $0.05 to $0.57 higher and successfully kept the momentum through
closing. October live cattle closed $0.57 higher at $107.35, December live
cattle closed $0.52 higher at $111.85 and February live cattle closed $0.32
higher at $116.07. Friday's slaughter is estimated at 111,000 head, 8,000 head
less than a week ago and 5,000 head less than a year ago. Saturday's slaughter
is projected to be around 55,000 head.
This past week was a prime example of how price discovery can work when
feeders work together. Early in the week, trade was idle, packers were
lackadaisical and feedlots weren't overly ambitious about establishing their
asking prices because they knew this week was going to be a waiting game.
Monday and Tuesday were both idle days, Wednesday's Fed Cattle Exchange didn't
move any cattle, at which point packers upped their bids and bought the first
round of cattle for the week, for $2.00 higher than last week. After
Wednesday's trade was noted, it was evident that there still needed to be more
cattle sold, but the question was, who is going to give in? Feedlots were bound
and determined to get their asking prices and sat current on their showlists,
which gave them some much needed leverage. The real question was how bad
packers wanted cattle this week. With boxed beef prices lower throughout most
of the week, no one really anticipated trade to scale higher come Friday. But
packers needed cattle more than we assumed as they called for delivery as early
as next week on some of the pens. Friday morning cattle traded in Nebraska for
$165 ($4.00 higher than last week's average) and live cattle sold for $104
($3.00 higher than last week's business).
Boxed beef prices closed higher: choice up $0.59 ($215.64) and select up
$0.55 ($203.94) with a movement of 147 loads (83.84 loads of choice, 20.79
loads of select, 28.42 loads of trim and 13.45 loads of ground beef).
MONDAY'S CASH CATTLE CALL: Steady. Packers aren't going to want to pay
anything more than what they absolutely have to next week. But given that
feeders committed upwards of 80,000 head (Monday's report will solidify exactly
how many sold), feedlots managed to lock in some more leverage this week giving
them the opportunity to set the bar higher.
Feeder cattle contracts rallied as the cattle complex saw a boost from the
morning's stronger cash cattle trade. September feeders closed $0.95 higher at
$140.87, October feeders closed $0.97 higher at $142.42 and November feeders
closed $0.32 higher at $142.52. Heading into next week posts a lot of questions
for the cattle market -- was this week's higher trade towards the tail end of
the week a last-minute opportunity or does the stronger trade have enough
support to carry into next week?
At Herreid Livestock Market in Herreid, South Dakota, compared to a week
ago, the best test on steers was the 800- to 850-pound weight group and those
also weighing 951 to 1,050 pounds, which sold $1.00 to $5.00 higher, and steers
weighing 901 to 950 pounds sold steady to $1.00 higher. There wasn't enough of
a test to accurately portray a trend on heifers. There was ample demand again
this week for the market's yearlings and there was a large crowd in the stands
willing to buy the right type and kind. The CME feeder cattle index 9/17/2020:
up $0.97, $142.18.
Rounding out the week, the lean hog complex saw some advancement in the
deferred contracts, but the nearby contracts traded mildly lower. October lean
hogs closed $0.02 lower at $66.50, December lean hogs closed $0.10 lower at
$63.52 and February lean hogs closed $0.35 higher at $68.55. Even though the
day's cash price dropped $2.35, packers still purchased over 8,500 head
negotiated and the week's ending cutout value closed slightly higher. Heading
into next week, the market is going to anxious to see if export demand is going
to surface. Pork cut outs totaled 389.73 loads with 345.89 loads of pork cuts
and 43.84 loads of trim. Pork cutout values: up $0.50, $87.53. Friday's
slaughter is estimated at 468,000 head, 12,000 head less than a week ago and
26,000 head more than a year ago. Saturday's kill is projected to be around
193,000 head. And Thursday's hog slaughter was revised to 470,000 head. The CME
lean hog index 9/16/2020: up $1.42, $67.84.
MONDAY'S CASH HOG CALL: Higher. Even though the market trended slightly
lower this week, there's still a lot of hope for upside potential in export
ShayLe Stewart can be reached at firstname.lastname@example.org
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