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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.

ShayLe Stewart
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 shayle.stewart@dtn.com

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