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DTN Midday Livestock Comments 11/08 12:07
Technical Pressure Drives Cattle Complex Lower Friday
A few more live sales have been reported in Nebraska at $188, but otherwise
the cash cattle market is still quiet.
ShayLe Stewart
DTN Livestock Analyst
GENERAL COMMENTS:
The livestock complex is trading mostly lower into Friday's noon hour as
some technical pressure is settling into the market. A few more cash cattle
sales have been reported in Nebraska at $188, but otherwise the market is still
quiet. December corn is up 1/2 cent per bushel and December soybean meal is
down $1.80. The Dow Jones Industrial Average is up 258.15 points.
LIVE CATTLE:
The live cattle complex is trading lower as the market endures some pressure
as traders are likely reacting to the fact that some of the funds are moving
their positions as the Goldman roll gets underway. Friday's lower break
thankfully remains above the market's 100-day moving average, but all in all it
isn't that surprising the market is trading lower given that cash prices are
developing $2.00 to $3.00 lower than last week's weighted average and boxed
beef prices are trending lower too." Nevertheless, the market will likely
continue with this weaker trend through Friday's close. December live cattle
are down $1.55 at $184.27, February live cattle are down $1.57 at $185.85, and
April live cattle are down $1.42 at $186.82. Following Thursday's light cash
cattle trade, there have been a few more deals starting to surface as the
market nears Friday's noon hour. Some live sales have been reported this
morning in Nebraska at $188, but most of the other bids have sat idle this
morning as they're still several dollars below current asking prices. Southern
feedlot managers are asking $190 to $192 and Northern feedlot managers are
asking $296-plus. There were a few sales noted Thursday afternoon in eastern
Nebraska where cattle sold for mostly $294, which is $3.00 lower than last
week's weighted average. Packer interest should improve this afternoon but
given that they've been able to slowly add to their inventory over the last
couple of weeks, prices are expected to be lower this week and the week's
movement could be light.
Friday's WASDE report was very support to the cattle and beef markets of
2024 and 2025. Beef production for 2024 was increased by 25 million pounds as
dressed weights are significantly heavier than originally assumed and cow
processing speeds aren't expected to decline through the year's end, which more
than offsets the decrease in the fed cattle slaughter. Beef production for 2025
was also increased by 355 million pounds as fed cattle slaughter is expected to
increase. Feedlot managers will be pleased to see quarterly steer prices were
increased from last month's projection as steer prices in the fourth quarter of
2024 are expected to average $188 (up $2.00 from last month); steer prices in
the first quarter of 2025 are expected to average $188 (up $1.00); steer prices
in the second quarter of 2025 are expected to average $187 (up $1.00); and
steer prices in the third quarter of 2025 are expected to average $186 (up
$1.00). Beef imports for 2024 were increased by 125 million pounds as packers
need more processing type of cuts, but exports for 2024 also saw a slight
increase of 5 million pounds. Beef imports for 2025 were increased by 90
million pounds, but 2025 exports were also increased by 100 million pounds.
Boxed beef prices are lower: choice down $0.18 ($309.28) and select down
$1.59 ($278.13) with a movement of 104 loads (67.66 loads of choice, 11.41
loads of select, 8.67 loads of trim and 16.42 loads of ground beef).
FEEDER CATTLE:
With the live cattle complex trading lower, it comes as no surprise that the
feeder cattle market is also trending lower. November feeders are down $2.07 at
$245.57, January feeders are down $2.67 at $241.67, and March feeders are down
$2.75 at $239.50. Friday's lower dive in the spot January contract does push
the contract back below its 40-day and 100-day moving averages, which typically
means the market is in a weaker trend.
LEAN HOGS:
The lean hog complex is trading mixed into Friday's noon hour as the market
is currently enduring some pressure on nearby contracts, but the deferred
contracts are trading slightly higher. December lean hogs are down $0.72 at
$80.47, February lean hogs are down $0.45 at $84.85, and April lean hogs are
down $0.22 at $88.95. The swings in the carcass price have been extreme lately
as the belly is up $33.51 Friday morning -- which has pushed the carcass price
over $7.00 higher. The projected CME Lean Hog Index for 11/7/2024 is down $0.18
at $90.43 and the actual index for 11/6/2024 is up $0.37 at $90.61. Hog prices
are lower on the Daily Direct Morning Hog Report, down $3.03 with a weighted
average price of $82.23, ranging from $74.00 to $85.50 on 924 head and a
five-day rolling average of $83.52. Pork cutouts total 195.33 loads with 170.20
loads of pork cuts and 25.13 loads of trim. Pork cutout values: up $7.13,
$105.10.
Friday's WASDE report was supportive for the hog and pork markets of 2024
and 2025. Pork production for 2024 was decreased by 90 million pounds as
slaughter speeds and carcass weights are both lighter than originally assumed,
and the trend continued into 2025 projections as pork production for 2025 was
decreased by 115 million pounds. Thankfully the industry did see some support
in terms of quarterly prices as hog prices in the fourth quarter of 2024 are
expected to average $60.00 (up $5.00 from last month); hog prices in the first
quarter of 2025 are expected to average $58.00 (up $3.00); hog prices in the
second quarter of 2025 are expected to average $62.00 (up $1.00); and hog
prices in the third quarter of 2025 are expected to average $63 (which is
unchanged from a month ago). Pork imports for 2024 were decreased by 21 million
pounds and pork exports for 2024 were increased by one million pounds. Pork
imports for 2025 were decreased by 15 million pounds, but pork exports for 2025
were decreased by 40 million pounds.
ShayLe Stewart can be reached shayle.stewart@dtn.com
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