DTN Midday Livestock Comments 09/26 11:49
Outside Pressures Send Livestock Lower
With both interest rates and inflation running wildly, the livestock complex
is trading lower into Monday afternoon.
DTN Livestock Analyst
At the day's opening bell, the cattle complex seemed as though it was going
to trade strong; but as time passed, outside market concerns pushed contracts
lower. The lean hog complex is in the same boat as its market is $1.00 to $2.00
lower and desperately needs to see strong domestic consumer support. December
lean hogs are down $2.88 at $79.925, December corn is down 7 cents per bushel
and December soybean meal is down $1.90. The Dow Jones Industrial Average is
down 270.76 points.
Live cattle futures are plunging lower as the market's strong show in the
cash cattle sector isn't enough support to outweigh the pressures of the
economy's uncertainty. October live cattle are down $0.75 at $143.50, December
live cattle are down $1.25 at $147.30, and February live cattle are down $1.07
at $151.62. With boxed beef prices waning and packers now having to chase the
cash market a little more aggressively -- monitoring slaughter speed is
incredibly important. If boxes continue to work their way lower, packers may
cut production in the form of slowing processing to preserve margin.
Last week, Southern live cattle traded for $143, which is $1.00 stronger
than last week's weighted average, and Northern dressed cattle traded for
mostly $228, which is also $1.00 stronger than last week's weighted average.
Boxed beef prices have not been updated by the USDA at this time.
Feeder cattle futures started the day off higher, but as the morning
progressed lower tones sent the market tumbling lower. Friday's Cattle on Feed
Report came out neutral as placements and on-feed totals were steady with a
year ago, but marketings were 6% higher. Nevertheless, the market seems to be
trading lower not because of Friday's report necessarily, but because of
overbearing outside pressures (higher interest rates, higher inflation and
overall economic uncertainty). October feeders are down $0.82 at $177.52,
November feeders are down $0.57 at $177.67 and January feeders are down $0.92
at $178.55. Thankfully the corn complex isn't adding to the list of market
pressures as it's trading 5 to 6 cents lower.
The lean hog complex is taking a wild ride in Monday's market and
unfortunately the spot December contract is carving out a new low for the move,
which is pressuring prices not last seen since February 2022. October lean hogs
are down $1.97 at $90.65, December lean hogs are down $2.75 at $80.05, and
February lean hogs are down $2.77 at $84.27. It's likely the market is
concerned with China's third release of pork reserved last week and is
skeptical of what this week's export report will unveil. Continuing to monitor
pork cutout values will be one of the most important signals for the lean hog
market as packers are going to need to see consumer support here domestically.
The projected CME Lean Hog Index for 9/23/2022 is down $0.60 at $96.99, and
the actual index for 9/22/2022 is down $0.42 at $97.59. Hog prices are higher
on the Daily Direct Morning Hog Report, up $4.24 with a weighted average of
$90.45, ranging from $82.00 to $100.00 on 5,271 head and a five-day rolling
average of $93.03. Pork cutouts total 198.67 loads with 166.28 loads of pork
cuts and 32.38 loads of trim. Pork cutout values: up $0.64, $101.57.
ShayLe Stewart can be reached firstname.lastname@example.org
(c) Copyright 2022 DTN, LLC. All rights reserved.
For more free DTN information sent right to your email each morning - click here
to sign up for DTN Snapshot.