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DTN Midday Livestock Comments          07/02 12:19

   Cattle Contracts Aren't Weakening

   Heading into the afternoon cattle contracts remain persistent on trading 
substantially higher with the lean hog complex isn't as optimistic.

ShayLe Stewart
DTN Livestock Analyst

   General Comments

   Heading into the noon hour of the last trading day for this week, cattle 
contracts remain optimistic and the lean hog complex is split. Shortened 
holiday weeks are tough because one minute the market can be as painfully 
boring as attending a third-grader's recorder concert, and the next minute 
you're sitting back in your chair wondering what the hell these bullish cattle 
contracts are thinking! September corn is down 3 3/4 cents per bushel and 
December soybean meal is down $0.50. The Dow Jones Industrial Average is up 
229.12 points and NASDAQ is up 108.13 points.

   LIVE CATTLE

   Live cattle prices are rallying upwards of $2.17 in nearby contracts while 
live trade in Texas is developing for $93. I desperately long for the day when 
our marketplace can go back to trading on sound fundamentals because this 
off-the-cuff irrational denial of what the market is faced with simply cannot 
be sustained. August live cattle are up $2.02 at $99.35, October live cattle 
are up $2.05 at $102.72 and December live cattle are up $1.45 at $105.95. Cash 
cattle trade has been relatively quiet throughout the day with just a little 
bit of trade developing in Nebraska live for $95 to $96, and in Texas for $93 
live. Seeing that the market is closing early for the 4th of July weekend, it's 
safe to assume that the bulk of this week's trade is done and that only 
clean-up trade will wrap up the day. This week Southern live cattle have had a 
full range of $91 to $96, mostly $94 to $95, while Northern dressed deals have 
had a full range of $148 to $155, mostly $153 to $155.

   Thursday's export report shared that beef net sales of 12,300 mt were 
reported for 2020 which was down 49% from the previous week and down 36% from 
the prior four-week average. The three primary increases were from Japan (3,800 
mt including decreases of 500 mt), South Korea (2,900 mt, including decreases 
of 600 mt) and Taiwan (1,700 mt, including decreases of 100 mt).

   Boxed beef prices are mixed: choice up $0.16 ($205.54) and select down $0.13 
($198.30) with a movement of 79 loads (42.29 loads of choice, 10.13 loads of 
select, 10.20 loads of trim and 16.06 loads of ground beef).

   FEEDER CATTLE

   Feeder cattle contracts have had a volatile week -- enduring significant 
swings in prices and not feeling secure in either direction. Heading into the 
afternoon, the entire feeder cattle complex is trading higher, ranging from 
$1.47 to $2.60 stronger. August feeders are up $1.80 at $134.87, September 
feeders are up $2.00 at $136.02 and October feeders are up $1.87 at $136.77. 
Largely the market's gumption is stemming from the rally seen in the live 
cattle contracts.

   LEAN HOGS

   The lean hog complex has some contracts that would rally if support and 
interest would build but traders seem to me mostly checked out for the week and 
with an early close, the complex's chance of building a rally in the time the 
day has left is slim. July lean hogs are down $0.02 at $44.77, August lean hogs 
are up $0.22 at $49.30 and October lean hogs are down $0.32 at $47.95. The 
midday cutout value is up notably, just $0.14 shy of a $4.00 jump.

   Pork net sales of 39,200 mt were reported for 2020 which was up 63% from the 
previous week and up 61% from the prior four-week average. The three primary 
increases were from China (21,600 mt, including decreases of 900 mt), Mexico 
(8,400 mt including decreases of 4,300 mt) and Japan (2,200 mt including 
decreases of 300 mt).

   The projected lean hog index for 6/30/2020 is up $0.04 at $45.28, and the 
actual index for 6/29/2020 is up $0.01 at $45.24. Hog prices are lower on the 
National Direct Morning Hog Report, down $0.05 with a weighted average of 
$28.63, ranging from $24.00 to $30.13 on 4,988 head and a five-day rolling 
average of $28.61. Pork cutouts total 227.42 loads with 210.44 loads of pork 
cuts and 16.97 loads of trim. Pork cutout values: up $3.86, $67.48.

   ShayLe Stewart can be reached shayle.stewart@dtn.com




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