Monday Midday Livestock Market Update - Live Cattle Rally on WASDE Report

GENERAL COMMENTS:

Heading into Monday afternoon, the lean hog and live cattle contracts are rallying as the markets have found some technical backing. But the feeder cattle market is trending lower as corn prices rally modestly. December corn is up 11 cents per bushel and December soybean meal is up $2.90. The Dow Jones Industrial Average is up 57.98 points, and the NASDAQ is up 11.10 points.

LIVE CATTLE

Heading into the afternoon, the live cattle contracts have grown in strength as the day has progressed. October live cattle are up $0.37 at $125.95, December live cattle are up $0.50 at $131.40 and February live cattle are up $0.47 at $135.92. Last week, the market fought strenuous technical pressure as, late in the week, traders wouldn't even consider supporting the live cattle sector. The market could be rallying after seeing what Monday's WASDE report had to share. The July WASDE report projected steer prices for the third quarter jumped $5 from last month to average an estimated $120, and fourth-quarter steer prices jumped $3 to $123. These quarterly increases pushed the annual steer price to average $119.20, which is $2.20 more than last month's projection of $117. Beef imports were unchanged from a month ago, but beef exports grew by another 80 million pounds, to 3,422 million pounds for the year. New showlists appear to be mixed, higher in Nebraska and Colorado but lower in Texas and Kansas.

Last week's negotiated cash cattle trade totaled 82,381 head. Of that, 66% (54,483 head) were committed for the nearby delivery, while the remaining 34% (27,898 head) were committed for delivery in the following 15 to 30 days.

Boxed beef prices are mixed: choice down $2.28 ($276.31) and select up $0.77 ($258.18) with a movement of 37 loads (26.90 loads of choice, 5.72 loads of select, zero loads of trim and 4.26 loads of ground beef).

FEEDER CATTLE

As the corn market posts a $0.10 to $0.12 rally in its nearby contracts, the feeder cattle contracts are waning lower as they try to balance both technical resistance and the corn market's strength. August feeders are down $0.97 at $158.20, September feeders are down $0.87 at $160.95 and October feeders are down $0.80 at $162.90. This week is another big test of what feeder cattle prices are going to be this year as Western Video Market hosts their Silver Legacy sale in Reno, Nevada, where they are expecting to sell right at 150,000 head early this week. The feeder cattle market has been a hard one to call as drought is forcing producers to liquidate on their cow-herds and ship their calves at earlier dates, but yet prices have been relatively strong as buyers know that there aren't as many calves to sort through this year. Last week, throughout the nation, feeder cattle traded on average $6 to $10 stronger than the previous week and so with a strong undertone bolstering the market, the sellers at Western Video Market are expected to do well this week as buyers continue to seek calves aggressively.

LEAN HOGS

Even though Monday's WASDE report didn't show stronger export numbers for the pork industry, the market is still rallying as domestic demand continues to fuel the market amid tight supplies. August lean hogs are up $1.82 at $103.40, October lean hogs are up $1.40 at $86.82 and December lean hogs are up $1.22 at $80.27. Monday's WASDE shared a different outlook than what the market saw a month ago for the pork sector. The biggest changes were seen as lower production had to be accounted for upon seeing the latest USDA Quarterly Hogs & Pigs report. The report indicated that there are fewer sows to be farrowed, which yields fewer hogs to market later in the marketing cycle, and already, packers are running slower processing speeds amid tight market-ready hog supplies. And both pork imports and exports were unchanged from a month ago (imports at 982 million pounds/ exports at 7,552 million pounds).

The projected lean hog index for 7/8/2021 is down $0.03 at $109.74, and the actual index for 7/7/2021 is down $0.36 at $109.77. Hog prices are higher on the National Direct Morning Hog Report, up $0.24 with a weighted average of $106.69, ranging from $106 to $116 on 2,540 head and a five-day rolling average of $108.55. Pork cutouts total 162.21 loads with 138.88 loads of pork cuts and 23.33 loads of trim. Pork cutout values: up $2.40, $118.84.