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DTN Midday Livestock Comments          08/12 12:03

   Cash Cattle Trade Jumps Higher

   Cattle contracts are keeping with their excitement as the cash market is 
vastly supporting the future complex's movement.

ShayLe Stewart
DTN Livestock Analyst

   General Comments

   Cattle cash trade has surprised most as Wednesday morning's Fed Cattle 
Exchange pushed cash cattle prices to $104 to $104.50, which is $4.00 stronger 
than last week's weighted average. Meanwhile cattle contracts continue to rally 
while the lean hog complex regresses as uncertainly still plagues the near 
future. December corn is up 1 3/4 cents per bushel and December soybean meal is 
down $0.90. The Dow Jones Industrial Average is up 256.33 points and NASDAQ is 
up 235.09 points.

   LIVE CATTLE

   Live cattle contracts jump and skip as Wednesday is feeling like the new 
Friday as cash cattle prices jump $4.00 higher. August live cattle are up $1.80 
at 106.45, October live cattle are up $1.52 at $109.82 and December live cattle 
are up $1.15 at $112.82. August live cattle prices jump to levels not touched 
since February 2020 and the complex is seeing the biggest gains in the nearby 
contracts which were lower than deferred contracts as traders believe that less 
uncertainty will plague 2021. A light trade has been reported in Kansas and 
Texas for $104 to $105, which is $4.00 to higher than last week's average. 
Trade has yet to develop in the North where asking prices are firm at $168 plus.

   The Fed Cattle Exchange Auction listed a total of 890 head in Kansas and 
Texas only, with 602 actually sold, 288 head listed as unsold, and zero head 
listed as PO (Passed Offer). The state by state breakdown looks like this: 
Kansas 531 total head, of which 457 head sold at $104 to $104.50, that left 74 
head unsold; Texas 359 total head, of which 145 head sold at $104.50, that left 
214 head unsold. The delivery date/weighted averages breakdown is as listed: 
1-9-day delivery: 562 head total, of which 348 head sold, with a weighted 
average price of $104.50; 1-17-day delivery 328 head total, of which 254 head 
sold, with a weighted average price of $104.27.

   Boxed beef prices are higher: choice up $0.56 ($208.64) and select up $1.62 
($196.64) with a movement of 99 loads (65.19 loads of choice, 14.25 loads of 
select, 11.10 loads of trim and 8.46 loads of ground beef).

   FEEDER CATTLE

   Feeder cattle contracts bravely head higher as the cattle market is 
stimulated by stronger cash cattle prices and strong feeder cattle sales. 
August feeders are up $1.77 at $146.27, September feeders are up $2.52 at 
$149.17 and October feeders are up $2.45 at $150.07. This type of movement is 
encouraging to cattle as the fall run is less than two short months away, but 
as we've learned through 2020, a lot can happen in two months. The fear with 
the complex's recent rally is that it is getting over done, and that a 
correction will be made. The question is, how big of a correction?

   LEAN HOGS

   Uncertainty continues to undermine the lean hog complex as one day the 
market rallies higher, ready to break out of resistance, but then consequently 
the market is followed by a handful of lower trading days that leave producers 
and traders unsure of where the true direction of the market is headed. October 
lean hogs are down $0.65 at $51.20, December lean hogs are down $0.22 at $53.07 
and February lean hogs are up $0.15 at $60.70. It's a critical time for cutout 
values as August through Labor Day are the ending of the summer which then lead 
to less grilling. Pork producers are caught wanting cutout vales to head higher 
so packers stay motivated to kill and hopefully the cash market will see a bump 
in prices, but at the same time producers know that seasonally they need to 
move a large volume of hogs as their opportunity to do so later down the road 
isn't as favorable.

   The projected lean hog index for 8/11/2020 is up $0.03 with a weighted 
average of $53.82, and the actual index for 8/10/2020 is up $0.77 with a 
weighted average of $53.79. Hog prices are higher on the National Direct 
Morning Hog Report, up $0.07 with a weighted average of $37.50, ranging from 
$34.50 to $38.00 on 3,591 head and a five-day rolling average of $38.20. Pork 
cutouts total 199.92 loads with 175.99 loads of pork cuts and 23.93 loads of 
trim. Pork cutout values: up $0.49, $70.88.

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

    




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