Thursday Midday Livestock Market Summary - Lean Hogs Take Advantage of Strong Exports

GENERAL COMMENTS:

The lean hog market has battled a tough week, but upon seeing Thursday's strong export report, the market has trudged higher and stole the spotlight of the livestock sector. Meanwhile, both the live and feeder cattle contracts are sitting on the backburner of the market, drifting lower as traders look elsewhere. December corn is up 5 1/2 cents per bushel and December soybean meal is down $0.20. The Dow Jones Industrial Average is up 182.60 points and NASDAQ is up 176.65 points.

LIVE CATTLE

The live cattle market is retracting after its strong advancements earlier this week. December live cattle are down $0.75 at $130.82, February live cattle are down $0.60 at $136.35 and April live cattle are down $0.40 at $138.95. After posting aggressive gains earlier this week, traders have seemed to pause their aggression and are looking over the fence to the lean hog market, where the day's excitement seems to be. Even though the futures market is trending lower, the live cattle market's morale is still strong. This past week, cash cattle prices have jumped significantly, processing speeds have run aggressively, and Thursday's export report showed positive figures as well. There isn't much to talk in regard to cash cattle, as its likely that the bulk of this week's trade is done with. Thus far, Southern live cattle have sold for $124 to $126 which is steady to $2.00 stronger than last week and Northern dressed cattle sold anywhere from $196 to $200, which is $4.00 more than what they sold for last week. Some clean-up trade could develop before the week's end but it's most likely that the week's trade is done for.

Beef net sales of 19,200 mt reported for 2021 were up noticeably from the previous week and up 39% from the prior four-week average. The three largest buyers were South Korea (6,200 mt), China (4,500 mt) and Japan (2,800 mt).

Boxed beef prices are mixed: choice down $0.99 ($282.64) and select down $0.49 ($262.18) with a movement of 61 loads (22.33 loads of choice, 15.75 loads of select, 11.62 loads of trim and 11.67 loads of ground beef).

FEEDER CATTLE

The feeder cattle market has sunk lower thus far through Thursday's trade and it's likely that the market will continue to do so if corn prices continue to trend green. With nearby corn contracts posting another $0.06 rally, feeders are having to refigure their input costs as they're wanting to buy more calves with the market's positive outlook for the live cattle market, but the revenue made has to outweigh the cost of getting the cattle to end weight. November feeders are down $0.32 at $158.15, January feeders are down $0.75 at $158.20 and March feeders are down $0.75 at $159.45. Even though feeders are having to push the pen to paper and need to know where their inputs lie, the uptick in the live cattle market has sent strong undertones throughout cattle complex and feeders are paying close attention. Strong sales have been reported throughout the country this past week as feedlots are anxious to buy calves. Calves that come to town with a vaccination program and that have been weaned are ringing the bell!

LEAN HOGS

China wasn't listed as one of the top three buyers in the morning's export data, but a debuting of strong sales is just what Thursday's market needed to scale higher. December lean hogs are up $2.77 at $74.80, February lean hogs are up $2.37 at $76.70 and April lean hogs are up $1.67 at $80.00. Thursday's slaughter is only expected to amount to 478,000 head, which isn't what the market needs. These slower processing speeds are crippling producers' ability to stay current and give packers more reason to wane the cash market lower. The strong export report will most likely keep the market positive throughout the day's close, but the problems of supply outpacing demand remain.

The projected lean hog index for Oct. 26 is down $0.99 at $81.67, and the actual index for Oct. 25 is down $0.32 at $82.66. Hog prices are lower on the National Direct Morning Hog Report, down $0.55 with a weighted average of $62.21, ranging from $61.00 to $65.00 on 6,843 head and a five-day rolling average of $63.10. Pork cutouts total 129.88 loads with 108.42 loads of pork cuts and 21.46 loads of trim. Pork cutout values: up $7.28, $100.75.

Pork net sales of 29,500 mt reported for 2021 were up 41% from the previous week but down 1% from the prior four-week average. The three largest buyers were Mexico (16,900 mt), Japan (3,300 mt) and Canada (2,800 mt).