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Tuesday, May 4, 2021

Tuesday Midday Livestock Market Summary - Corn Strikes Higher, Sending Cattle Crumbling Lower


The livestock complex isn't having an ordinary Tuesday as cash cattle trade is already starting to test the market waters. Cattle futures have been pressured to trade lower amid another stout corn rally which doesn't look like it's going to be easily swayed like Monday's corn rally was. July corn is up 21 cents per bushel and July soybean meal is up $6.20. The Dow Jones Industrial Average is down 130.54 points and NASDAQ is down 350.86 points.


Oddly enough, cash cattle trade is already starting to develop in both the Northern and Southern Plains. For the last couple of weeks, the market has become accustomed to the bulk of the week's cash cattle trading on Wednesday with a little clean-up action trickling in on Thursday and Friday. But with boxed beef prices higher, packers could be looking at the margins they are turning at this point and wanting to kick up slaughter speeds to capitalize on the opportunity at hand. Southern live deals are marked at $119, which is steady to $1.00 higher than last week's business. Northern cattle are selling for $190, which is fully steady with last week's business. June live cattle are down $2.52 at $112.75, August live cattle are down $1.92 at $116.45 and October live cattle are down $1.60 at $121.35.

In the back of feedlot operators' minds, they're balancing two major factors this week. 1) Feedlots know all too well if packers are coming out and aggressively buying cattle early in the week it's because they NEED cattle. This extends feedlots the opportunity to demand higher prices as packers are actively working the countryside. 2) With packers having a considerable number of cattle already procured for this week and the weeks ahead through the deferred delivery, their behavior in this week's market could be tricky to pinpoint.

Boxed beef prices are higher: choice up $1.41 ($300.71) and select up $0.92 ($284.71) with a movement of 62 loads (34.35 loads of choice, 18.66 loads of select, zero loads of trim and 9.19 loads of ground beef).


The cat-and-mouse game between the feeder cattle and corn contracts isn't subsiding anytime soon. As the corn market trades up, up, and up, the feeder cattle contracts go down, down, and then down some more. With input costs at the forefront of all feeder cattle buyers' minds, until buyers see either a regression in the corn market or see the corn market maintain some essence of steady trade, calf buyers are holding their cards close to their chest as break-evens change by the day. May feeders are down $3.92 at $129.12, August feeders are down $4.07 at $142.72 and September feeders are down $3.92 at $145.25. If the cash cattle and live cattle contracts could show some light at the end of the tunnel, the feeder cattle contracts could cling to some support. But at the time being, the live cattle complex isn't in much better shape.


The hog complex determination to trade higher only seems to be growing. June lean hogs are up $0.10 at $112.77, July lean hogs are up $0.90 at $112.97 and August lean hogs are up $0.92 at $108.35. One may look at the nearby lean hog contracts and wonder just how sold traders are on the notion of continuing to trade higher after the market already broke through the resistance at $110. But with the surprising support stemming from fundamentals, support is backing the market's higher quest. Tuesday's cash hog prices are not only higher, but the top bid jumped from $116.00 Monday morning to $121.50 Tuesday morning -- WOW! If anything, the market expected the bottom bid to close up the difference between the two, but when supplies are tight and packers need to find hogs, paying whatever the market demands is sometimes the reality.

The projected two-day CME Lean Hog Index is unavailable at this time. Hog prices are higher on the National Direct Morning Hog Report, up $3.46 with a weighted average of $111.61, ranging from $107.04 to $121.50 on 4,390 head and a five-day rolling average of $109.89. Pork cutouts total 245.27 loads with 219.85 loads of pork cuts and 25.42 loads of trim. Pork cutout values: down $0.04, $111.62.

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