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DTN Midday Livestock Comments 05/29 12:12
Livestock Contracts Head Lower into Friday's Noon Hour
The early part of the week blessed the market as contracts jumped higher and
cash cattle traded steady, but come the latter part of the week contracts have
back-peddled.
ShayLe Stewart
DTN Livestock Analyst
General Comments
As most people jump with joy and sip their coffee thinking, "Thank God it's
Friday," the livestock contracts have merely done the opposite. As tensions
rise between China and Hong Kong and some packing plants are seeing a second
round of COVID-19 breakout, the board has seemed to throw in the towel and is
giving back some of the ground gained earlier in the week. July corn is down 3
3/4 cents per bushel and July soybean meal is down $1.80. The Dow Jones
Industrial Average is down 264.52 points and NASDAQ is down 14.30 points.
LIVE CATTLE
Live cattle contracts aren't taking Friday's pressure with ease as contracts
dip $1.00 to $2.80 lower. June live cattle are down $2.32 at $99.15, August
live cattle are down $2.75 at $98.45 and October live cattle are down $2.42 at
$100.35. The market continues to be engulfed with uncertainty as contracts fall
and the live cattle basis grows, nearby contracts dip below $100 but yet
slaughter continues to press onwards and forward, and cash cattle prices are
elevated to $120? Fundamentals are key to a healthy marketplace, and it's
evident that through this time fundamentals have been thrown to the wayside.
Some light cash cattle trade has popped up from a major in Nebraska who bought
dressed cattle for $190.
Boxed beef prices are lower: choice down $3.99 ($365.57) and select down
$0.63 ($343.46) with a movement of 64 loads (26.48 loads of choice, 13.95 loads
of select, 14.71 loads of trim and 9.11 loads of ground beef).
FEEDER CATTLE
Feeder cattle contracts are trying to ride the wave that Friday has been
floating on without closing limit lower, but as the day processes contracts are
falling more and more. August feeders are down $2.30 at $133.20, September
feeders are down $2.20 at $134.05 and October feeders are down $2.20 at
$134.57. Sale barns have had phenomenal sales in the last couple of weeks
despite the board's indecisiveness. Heading into the heart of early summer calf
specialty sales, the feeder cattle market needs live cattle prices to hold
strong and for the board to rally.
LEAN HOGS
The lean hog complex is trading somewhat lower but given the news
circulating throughout the day, the board is maintaining quite well. June lean
hogs are down $0.62 at $56.30, July lean hogs are down $0.77 at $54.87 and
August lean hogs are down $0.57 at $54.45. Late Thursday afternoon Tyson
announced that they would be closing their Storm Lake plant in Iowa for the
rest of the week due to COVID-19. When at full capacity the plant processed
17,250 a day. After performing a deep-clean this week the plant is scheduled to
resume business next week. Hopefully this isn't a trend that's about to take
off again -- fingers crossed.
The projected lean hog index for 5/28/2020 is down $1.70 at $61.25 and the
actual index for 5/27/2020 is up $0.42 at $62.95. Hog prices are lower on the
National Direct Morning Hog Report, down $0.61 with a weighted average of
$36.73, ranging from $29.00 to $38.25 on 4,931 head sold and a five-day rolling
average of $36.31. Pork cutouts total 396.22 loads with 364.26 loads of pork
cuts and 31.97 loads of trim. Pork cutout values: up $1.37, $90.83.
ShayLe Stewart can be reached shayle.stewart@dtn.com
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