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DTN Midday Livestock Comments          10/16 12:10

   Livestock Contracts Feel Friday's Pressure

   Heading into the final stretch of the week, the livestock complex takes a 
turn for lower prices in all three markets.

ShayLe Stewart
DTN Livestock Analyst

   General Comments

   Lean hog contracts tried rallying early Friday morning but upon absorbing 
the disappointing export report, the market has shifted lower to follow suit 
with the cattle contracts. It's been doggish week for the cattle contracts as 
lower boxed beef prices added pressure to the marketplace and lower cash cattle 
trade solidified the weaker mentality. Rising corn prices and lack of trader 
support also added stress to the feeder cattle contracts as they have traded 
lower throughout nearly the entire week.

   December corn is up 1 1/4 cents per bushel and December soybean meal is down 
$4.10. The Dow Jones Industrial Average is up 236.04 points and NASDAQ is up 
32.21 points.

   LIVE CATTLE

   Keeping with the week's lower trend the live complex tips into Friday's 
afternoon fully lower. October live cattle are down $0.52 at $107.25, December 
live cattle are down $0.82 at $108.72 and February live cattle are down $0.87 
at $111.55. Feeling pressure from all angles; lack of support from futures 
market, lower boxed beef prices and a lower cash cattle market, the live cattle 
market has had a bearish week. Friday's cash cattle trade remains illusive as 
bids haven't surfaced. Following the modest trade earlier this week Friday's 
trade isn't expected to be more than some clean up trade here and there.

   This week's export report shared that beef sales of 13,400 mt reported for 
2020 were down 35% from the previous week and 31% from the prior 4-week 
average.  The three primarily increases were for Japan (3,900 mt, including 
decreases of 200 mt), Mexico (3,100 mt) and South Korea (2,200 MT, including 
decreases of 300 mt).

   Boxed beef prices are mixed: choice up $0.18 ($210.66) and select down $1.90 
($194.60) with a movement of 78 loads (40.82 loads of choice, 24.29 loads of 
select, 6.73 loads of trim and 5.83 loads of ground beef).

   FEEDER CATTLE

   As Friday nears the noon hour, the feeder cattle market is seeing sharper 
losses develop in deferred contracts. October feeders are down $0.62 at 
$138.30, November feeders are down $0.65 at $135.82 and January feeders are 
down $1.90 at $130.20. It's been a tough week for both the feeder cattle 
futures and for calves selling throughout the countryside. Traders have stepped 
to the sidelines as uncertainty seems to keep building. Cattle enthusiasts 
worry about rising corn prices, this week's weaker cash cattle market and 
long-term demand as COVID-19 restrictions hold the foodservice industry 
hostage. With a plethora of calves still left to market this fall, worries 
about supply heavily outweighing demand grow more and more prevalent.

   LEAN HOGS

   Early Friday morning the lean hog market shot over the $70.00 resistance 
plane but upon facing this week's export report, the market decided to scale 
lower. December lean hogs are down $0.47 at $69.40, February lean hogs are down 
$0.62 at $70.80 and April lean hogs are down $0.92 at $73.52. Even though the 
industry would have liked another robust export report, this week's pork demand 
has been stellar domestically. As we understand that there will be fluctuations 
throughout the markets, if both markets (domestic and international) can 
maintain a healthy need for pork through rest of the fourth quarter and into 
the first quarter, the market will be relieved as U.S. supplies are ample.

   The projected lean hog index for 10/15/2020 is down $0.25 at $78.24 and the 
actual index for 10/14/2020 is up $0.25 at $78.49. Hog prices are lower on the 
National Direct Morning Hog Report, down $1.04 with a weighted average of 
$62.42, ranging from $58.00 to $66.00 on 4,823 head and a five-day rolling 
average of $62.76. Pork cutouts total 188.63 loads with 164.70 loads of pork 
cuts and 23.93 loads of trim. Pork cutout values: down $2.94, 98.48.

   Pork net sales of 26,800 mt reported for 2020 were down 56% from the 
previous week and 43% from the prior four-week average.  The three primary 
increases were for Mexico (11,900 mt, including decreases of 800 mt), China 
(5,200 mt, including decreases of 1,400 mt), Japan (4,700 mt, including 
decreases of 300 mt).

   ShayLe Stewart can be reached shayle.stewart@dtn.com

    

    




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