DTN Closing Livestock Comments

Cattle Markets Perking Up

Elaine Kub
By  Elaine Kub , Contributing Analyst
(DTN file photo)

GENERAL COMMENTS: The majority of the week's cash cattle trade looks like it will be left off until Friday, with sellers staying firm at their asking prices around $184 in the North and $113 in the South. Most bids haven't yet met those prices, instead staying at $182. But, on Thursday, one transaction for 1,000 head was noted in eastern Nebraska at $185. According to the closing report, the national hog base was $0.28 higher ($56-$71, weighted average $67.82). Corn futures closed 13 1/2 cents higher. The stock market stayed near its new record high and closed the day higher, up 7 points on the S&P 500.

LIVE CATTLE: It was another day of relatively quiet movement for live cattle futures, with the October contract gaining only $0.35 and all other contracts moving even less than that. However, once you string enough of these modest gains together, a significant short-term uptrend seems to have built in the cattle market. August live cattle futures are now $5.83 above their low from late June, and growing trading volumes suggest speculators may become eager to participate in the resurgence of this market. Consumer beef demand is generally expected to be robust when the stock market is doing well, as it is this week: The S&P 500 once again peeked above 3,000 points on Thursday. Beef cut-outs: lower, off $0.65 (choice, $213.77) to $0.10 (select, $190.79) with light-to-moderate demand and offerings (148 total loads of cuts, trimmings, and grinds).

FRIDAY'S CASH CATTLE CALL: Steady to $2 higher. Packer margins are currently favorable, and with that knowledge in their back pockets, cattle sellers this week seem determined to keep their asking prices firm at $184 in the North and $113 in the South.

FEEDER CATTLE: Feeder cattle futures led the upward direction of the cattle complex Thursday, perhaps in recognition of a missed bullet from the feed grains sector. USDA's official supply estimates for new-crop corn continue to be based off large acreage and yield figures, so grain prices remained relatively calm after Thursday's WASDE report. But there are doubts that such calm can last once the planted acreage gets resurveyed and new numbers get released in August. For now, cash corn at $4.25 (U.S. average) and feeder calves at under $140 remain available to forward-thinking hedgers. CME cash feeder index for 7/10: $139.32, up $3.50. Some very strong sale barn results from Bassett, Nebraska, (weighted average $154.71) and other northern regions (Aberdeen, South Dakota; Windsor, Iowa) helped juice up that index.

LEAN HOGS: The August lean hog contract continues to get the majority of this market's attention, as traders try to judge the timing and extent of the seasonal premium for lighter-weight hogs amid the seasonal burst of demand for bellies. On Thursday, that August contract dropped $2.55 per cwt, giving back nearly all of its gains from the previous session. This drastically corrected its spread over the July contract (only down $0.15), but that spread remained at $7.58 per cwt when the session closed. Pork cut-out: $72.17, up $0.57. Belly prices were back up above $100 per cwt after another wild daily swing in value. CME cash lean index for 07/09: $70.77, down $0.48 (DTN Projected lean index for 07/10: $70.65, down $0.12).

FRIDAY'S CASH HOG CALL: Steady. Estimated daily slaughter (479,000) and week-to-date slaughter (1,914,000) are running at a pace that reflects the record-large supplies available.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

(AG)

Elaine Kub