Thursday Midday Livestock Market Update - Feedlots Triumph in Another Week of Higher Cash Cattle Trade

GENERAL COMMENTS:

It's been an exciting and dynamic market right from the day's get-go. Cash cattle are selling higher, and the livestock contracts are all trending higher on the board. December corn is down 2 1/4 cents per bushel, and December soybean meal is down $1.80. The Dow Jones Industrial Average is down 18.04 points, and the NASDAQ is up 83.72 points.

LIVE CATTLE

Feedlots scuffed their feet, bought themselves some time, and lo and behold, packers finally stepped up, bumped their bids higher and cash cattle trade is now officially underway! There's been light trade reported in the South at $133, which is $1 higher than last week, and some Northern dressed deals have come in at $209 to $210, which is $2 to $3 higher. For the cattle left to sell, asking prices remain firm around $133 to $134-plus in the South and $211 in the North. The excitement that's roaring throughout the countryside as feedlots successfully move the market higher again this week has sparked the interest of traders and led the live cattle contracts to rally as well. December live cattle are up $0.82 at $133.05, February live cattle are up $0.87 at $137.27 and April live cattle are up $0.52 at $140.80. It's an exhilarating time for the cattle market, and truth be told, this rally holds more upside potential than downside fear, so long as packers keep their chain speeds flying. Thursday's export report was encouraging for the market, as well, as the complex moved a considerable volume of product, and it's been interesting to see China hold such a large role in the beef market over the last three weeks.

There aren't enough ways to explain how exciting the cash cattle market has been over the last month. Prices have had the opportunity to rally. The sheer volume in which the cash cattle market has sold has been exceptional, and I hope that you all realize that this is what the market can do when packers are forced to participate in the cash market -- there's nothing sweeter than true price discovery.

The Special Fed Cattle Exchange Auction held Thursday listed a total of 1,697 head, all of which were from Texas. Of these, 749 actually sold at $133 to $133.50, 474 were scratched from the auction and 474 head were listed as unsold, as they did not meet the reserve prices, which ranged from $133 to $133.50. Opening prices ranged from $130 to $131 and high bids ranged from $131 to $133.50.

Beef net sales of 25,500 metric tons (mt) for 2021 were up 23% from the previous week and 58% from the prior 4-week average. The three largest buyers were China (13,800 mt), Taiwan (3,600 mt) and Japan (3,200 mt).

Boxed beef prices are lower: choice down $1.90 ($276.57) and select down $1.15 ($262.91) with a movement of 86 loads (52.58 loads of choice, 13.37 loads of select, zero loads of trim and 20.20 loads of ground beef).

FEEDER CATTLE

The corn market did a head fake earlier in the day as the market initially opened higher, but as time has passed, the complex is now trading mildly lower in its nearby contracts, and consequently, the feeder cattle market has set out to secure a day of higher trade. January feeders are up $0.57 at $159.50, March feeders are up $0.60 at $161.70 and April feeders are up $0.70 at $164.42. With the cash cattle market heating up and corn prices bowing lower, the feeder cattle market seems eager to take full advantage of Thursday's trade and shake higher. Thankfully, the markets not only found support technically, but fundamentally, the market sits in a healthy position for supporting higher prices as buyers, though cautious of the corn market's rally, are buying calves vigorously and are still willing to pick up the right type of feeder cattle.

LEAN HOGS

The lean hog complex was bummed to see China absent from Thursday's export report, but the 2022 contracts are continuing to rally, as they're still hopeful for the year to come. Helping encourage traders that 2022 could be good from an export perspective was the announcement that Germany has confirmed that Africa swine fever has spread to a farm near Rostock, in a finisher pig site. December lean hogs are down $0.92 at $75.25, February lean hogs are up $0.20 at $83.35 and April lean hogs are up $0.10 at $87.62. And if the news of ASF spreading isn't enough bite in your coffee, check out the morning's pork cutouts. With the $12.58 jump in the morning's pork cutout value, watching to see where the afternoon's pork cutout values close is incredibly important, as a $12 jump seems far-fetched. So, more likely than not, we will see a small figure on the afternoon's close.

Pork net sales of 25,000 mt for 2021 were up 7% from the previous week but down 16% from the prior 4-week average. The three largest buyers were Mexico (16,900 mt), Japan (3,800 mt) and Canada (1,600 mt).

The projected lean hog index for 11/16/2021 is down $0.05 at $76.28, and the actual index for 11/15/2021 is up $0.16 at $76.33. Hog prices are lower on the National Direct Morning Hog Report, down $1.01 with a weighted average of $55.13, ranging from $53 to $56.50 on 4,405 head and a five-day rolling average of $56.98. Pork cutouts total 224.15 loads with 190.73 loads of pork cuts and 33.42 loads of trim. Pork cutout values: up $12.58, $97.10.