DTN Midday Livestock Comments 12/05 12:11
Cheaper Corn Brings Excitement to the Livestock Sector
The livestock complex is trading higher into Monday afternoon as the
contracts are fond of the weakening corn sector.
DTN Livestock Analyst
The entire livestock complex is trending higher into Monday afternoon as the
market warmly welcomes the onset of cheaper corn. The feeder cattle complex is
leading the charge higher as its market has now broken above both the 40-day
and 100-day moving averages. March corn is down 7 1/4 cents per bushel and
January soybean meal is up $7.30. The Dow Jones Industrial Average is down
After last week's mostly supportive trade, the live cattle complex is again
trending higher into Monday afternoon. Helping the market more than anything at
this point is that the corn complex is finding a softer bottom to its market
which obviously comes as celebratory news to cattle feeders who are facing
extremely high cost of grains. The cheaper it becomes for feedlots to finish
cattle, the more margin they should be able to secure if cash prices keep
trending in the current upward fashion. December live cattle are up $0.07 at
$153.42, February live cattle are up $0.35 at $156.22 and April live cattle are
up $0.37 at $159.95.
Last week Southern live cattle traded for $153.50 to $155, but mostly at
$155, which is fully steady with the previous week's weighted average. Northern
dressed cattle traded for $245 to $249, but mostly at $249, which is $4.00
higher than the previous week's weighted average.
Boxed beef prices are lower: choice down $2.69 ($247.24) and select down
$1.47 ($223.09) with a movement of 68 loads (39.49 loads of choice, 7.70 loads
of select, 13.22 loads of trim and 7.16 loads of ground beef).
With the nearby corn contracts trending $0.05 lower into Monday's noon hour,
the feeder cattle market is trading anywhere from 57 to 142 points higher as
feeders are loving the idea of cheaper feed prices. The nearby contracts are
seeing the biggest gains and current the spot January contract is not only
trading above its 40-day moving average, but also above its 100-day moving
average. The real question in the feeder cattle complex remains to be: What are
fat cattle prices going to do? In order for buyers to justify paying these
purchase prices, the output price of fats has to get stronger. January feeders
are up $1.40 at $183.85, March feeders are up $1.15 at $186.42 and April
feeders are up $0.82 at $189.45.
As the day has traded on the lean hog complex has grown more and more
confident in itself as prices are not only trading higher, but they're breaking
through current resistance points. December lean hogs are up $0.10 at $82.52,
February lean hogs are up $0.90 at $91.32 and April lean hogs are up $0.37 at
$96.20. As hog producers face extremely high feed prices, part of the market's
excitement stems from the fact that corn is trending $0.05 lower in its nearby
contracts. Additionally, the market could see followed through support in
Tuesday's complex if pork cutout values are able to close higher. The midday
report shows the carcass up $0.88 as the loin is up $4.08 and the rib is up
$4.91 -- two very supportive price jumps.
The projected lean hog index for 12/2/2022 is down $0.08 at $82.79, and the
actual index for 12/1/2022 is down $0.37 at $82.87. Hog prices are unavailable
on the Daily Direct Morning Hog Report as there hasn't been enough packer
participation to break through the threshold of confidently. We can see that
3,232 head have traded and that the market's five-day rolling average sits at
$84.99. Pork cutouts total 178.94 loads with 151.48 loads of pork cuts and
27.45 loads of trim. Pork cutout values: up $0.88, $89.82.
ShayLe Stewart can be reached firstname.lastname@example.org
Cattlemen are eager for supply and demand mechanics to swing their way, but
the market isn't completely free of hurdles as bearish concerns about the U.S.
and global economies loom. Hear DTN Livestock Analyst ShayLe Stewart's thoughts
on the 2023 cattle market at the all-virtual DTN Ag Summit on Dec. 12-13. Full
details available at http://www.dtn.com/agsummit
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