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DTN Midday Livestock Comments          01/27 12:10

   Support Slips Away from Livestock Contracts

   It's been a slow morning for the livestock contracts as the market's lack of 
interest leaves the contracts to scale lower.

ShayLe Stewart
DTN Livestock Analyst

   General Comments

   The week's support has left the livestock complex and leaves the live 
cattle, feeder cattle and lean hog contracts to all trade lower. The gusto of 
support that was ample earlier in the week has come up short upon Wednesday's 
arrival. The feeder cattle contracts are lacking trader interest, but their 
lower trend is spurred by higher corn prices as even the corn market is trading 
mostly lower. March corn is up 1 cent per bushel and March soybean meal is up 
$0.10. The Dow Jones Industrial Average is down 342.23 points and NASDAQ is 
down 162.40 points.


   As the live cattle contracts rest from their recent run of higher prices, 
once again the market's eyes fall to the cash cattle market as packers hate the 
idea of the market trading much higher but feedlots know they need to 
capitalize on this opportunity to gain some market-share. Live cattle contracts 
are trading modestly lower with the entire complex seeing pretty even pressure 
as the contracts trade anywhere from $0.62 to $0.90 lower. February live cattle 
are down $0.70 at $116.30, April live cattle are down $0.62 at $112.47 and June 
live cattle are down $0.60 at $118.87. Favoring the cash market's position is 
once again the strong, continued support that boxed beef prices are seeing. 
There's been a little interest develop in the cash cattle market as bids of 
$173 are on the table in Nebraska -- which is mostly steady with last week's 
trade. Asking prices are around $115 in the South and $182 to $185 in the 
North. If packers want to get cattle procured this week, they are going to need 
to up their ante. Trade could develop as soon as this afternoon, but if 
feedlots are going to get their fully asking prices it's more likely that trade 
waits until Thursday if not even until Friday. But remember, all good dealings 
take time!


   The Fed Cattle Exchange Auction listed a total of 1,570 head, of which 1,128 
actually sold, 442 head were listed as unsold, as they did not meet the reserve 
prices that ranged from $112.50 to $115. Opening prices were at $111 to $112, 
high bids ranged from $112.75 to $113. The state by state breakdown looks like 
this: Kansas 150 total head, all of which went unsold; Texas 1,193 total head, 
with 901 head sold at $112.75-$113, 292 head went unsold; Oklahoma 227 total 
head, all of which sold at $113.

   Boxed beef prices are higher: choice up $0.73 ($229.79) and select up $1.44 
($218.77) with a movement of 73 loads (40.95 loads of choice, 9.32 loads of 
select, 11.06 loads of trim and 11.34 loads of ground beef).


   It's another day of lower trade for the livestock contracts as the livestock 
sector neglects to draw the trader interest necessary to rally the complex 
higher. March feeders are down $0.72 at $140.75, April feeders are down $0.70 
at $143.57 and May feeders are down $0.82 at $145.12. Even though feeders would 
obviously like to see the feeder cattle contracts trading higher, Wednesday's 
weakness thankfully isn't stemming for higher corn prices as the corn contracts 
are too trading lower. If the cash cattle market can indeed secure higher 
profits this week, the momentum will help the overall moral of the feeder 
cattle contracts.


   With the vast support that the lean hog contracts have seen over the last 
week, the contracts are taking a breather and trading modestly lower into 
Wednesday's afternoon. February lean hogs are down $0.10 at $70.35, April lean 
hogs are down $0.45 at $76.50 and June lean hogs are down $0.17 at $87.75. 
Slaughter speeds were down slightly on Tuesday which is understandable due 
large amount of snow that parts of the Midwest endured, but hopefully by 
Wednesday afternoon packers are back to processing at higher levels.

   The projected lean hog index for 1/26/2021 is up $0.72 at $66.96, and the 
actual index for 1/25/2021 is up $0.36 at $66.24. Because hog prices were 
unavailable Tuesday due to confidentiality on the National Direct Morning Hog 
Report there is no comparison for Wednesday's price levels but Wednesday's 
market has traded with a weighted average of $55.86, ranging from $51.00 to 
$58.50 on 4,076 head and a five-day rolling average of $55.38. Pork cutouts 
total 177.00 loads with 149.25 loads of pork cuts and 27.74 loads of trim. Pork 
cutout values: up $2.70, $83.63.

   ShayLe Stewart can be reached



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