Wednesday, April 21, 2021  

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DTN Midday Livestock Comments          04/21 11:44

   Livestock Contracts Head South

   Wednesday hasn't been a friendly day for the livestock contracts as the 
entire complex trades fully lower. 

ShayLe Stewart
DTN Livestock Analyst


   The higher-and-lower, choppy, volatile trade that's developed this past week 
has been a whirlwind for the livestock contracts. Looking at the markets 
through a technical perspective, there's plenty of pressure as traders are 
apprehensive. But fundamentally, demand is still strong. May corn is up 18 3/4 
cents per bushel and July soybean meal is up $0.30. The Dow Jones Industrial 
Average is up 206.40 points and NASDAQ is up 92.75 points.


   A shake up in the livestock contracts wasn't what feedlots were hoping for; 
but nevertheless, traders have backed away from the complex and are letting the 
market fall lower. April live cattle are down $0.75 at $119.82, June live 
cattle are down $1.77 at $117.42 and August live cattle are down $1.25 at 
$118.15. There's been a few (a very slim few) cattle trade in the South for 
$120, and bids are being offered in the North at $192. The $120 trade is steady 
to $1.00 lower than last week's business. Asking prices in the South are pinned 
at $122 to $125 and in the North cattle are priced at $205-plus. There is no 
doubt feedlots are concerned with how the board is trading, but that's only one 
sector of the market -- don't forget about the strength in boxed beef prices 
and the vigorous kill speed at which this week is running. If feedlots can let 
the week's early bids pass them by there is a chance at least steady trade 
could be attained.

   The Fed Cattle Exchange Auction listed 4,972 head, of which 1,517 actually 
sold at $120 and $124; 2,252 head were listed as unsold, as they did not meet 
the reserve price that ranged from $120 to $125; and 1,203 head in Nebraska 
were scratched from the auction. Opening prices ranged from $118.50 to $125, 
high bids ranged from $119 to $124. The state-by-state breakdown looks like 
this: Kansas 884 total head, with 58 head sold at $120, 826 head unsold; 
Nebraska 2,080 total head, with 457 head sold at $124, 420 head unsold, and 
1,203 head scratched from auction; Texas 2,008 total head, with 1,002 head sold 
at $120, 1,006 head unsold.

   Boxed beef prices are higher: choice up $1.84 ($280.10) and select up $2.06 
($272.53) with a movement of 83 loads (57.62 loads of choice, 5.52 loads of 
select, 6.14 loads of trim and 13.98 loads of ground beef).


   Tuesday's flutter of support quickly dissipated Wednesday morning as the 
corn market is posting another successful rally where nearby contracts are 
gaining $0.10 to $0.16 per bushel and the May and July contracts are both 
trading above $6.00. These high corn prices, coupled with the fact that hay and 
grass are both trending higher as well, really put feedlots in a pinch as their 
inputs are increasing and they've yet to see a higher end dollar for fat 
cattle. April feeders are down $1.90 at $135.67, May feeders are down $2.60 at 
$140.15 and August feeders are down $1.80 at $152.77. Until the feeder cattle 
complex can see some steady trade throughout the corn market and some gains 
made throughout the live cattle complex -- trade could continue to be brutal.  


   Lean hog futures are fighting some technical pressure, but the fundamental 
support is still extraordinary. June lean hogs are down $1.72 at $104.62, July 
lean hogs are down $1.15 at $103.10 and August lean hogs are down $0.80 at 
$99.45. After two days of rallying vigorously, traders could be hesitant in 
supporting the market too much more before seeing Thursday's export report. 
Given the level hog prices have climbed to, it wouldn't be all that surprising 
to see a weaker export report again. A weaker export report isn't necessarily a 
bad thing right now for the U.S. market as domestic consumers are thoroughly 
supporting the hog market and with supplies as tight as they are it's hard for 
the market to keep up with both domestic and international demand.

   The projected two-day CME Lean Hog Index for 4/20/2021 is up $0.70 at 
$105.12, and the actual index for 4/19/2021 is up $0.65 at $104.42. Hog prices 
are higher on the National Direct Morning Hog Report, up $1.09 with a weighted 
average of $104.97, ranging from $102.00 to $110.50 on 6,439 head and a 
five-day rolling average of $103.66. Pork cutouts total 184.39 loads with 
158.88 loads of pork cuts and 25.51 loads of trim. Pork cutout values: up 
$2.76, $117.79.

   ShayLe Stewart can be reached

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