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DTN Midday Livestock Comments          09/27 11:21

   Live Cattle, Hogs Lower After Cautiously Higher Start

   December contracts of live cattle and lean hogs tried to start higher 
Tuesday morning, but caved in to more selling as the morning went on, still 
pressured by economic concerns and a soaring U.S. dollar. November feeder 
cattle were trading lower, also under outside pressures and from Tuesday's 
higher price of corn.

Todd Hultman
DTN Lead Analyst

GENERAL COMMENTS:

   Tuesday's commodities are mixed, taking advantage of a temporary pause in 
the U.S. dollar. November feeder cattle are lower, pressured by Tuesday's 
higher corn price. December cattle and December hogs tried to start higher but 
are now extending Monday's new lows. December corn is trading up 6 cents and 
December soybean meal is up $2.70. The Dow Jones Industrial Average is trading 
down 157 points as the Fed promises more rate hikes ahead.

LIVE CATTLE:

   December cattle are trading down $0.65 at $146.70 at midday Tuesday, leaning 
lower again after a cautious higher start. Outside market concerns continue to 
weigh heavy on commodity prices, including cattle with concerns that a slower 
economy will hurt beef demand at the retail counter. Last week's unweighted 
average for live steers came in at $145.09 Monday, up $1.45 from the previous 
week. The unweighted average for dressed steers was $228.90, up $2.04 from the 
previous week. 116,546 of negotiated volume last week was an encouraging 
indication of packer demand, but this market remains spooked by outside market 
concerns and is vulnerable to more noncommercial selling. Friday's CFTC data 
showed noncommercials holding 120,432 long contracts of live cattle as of 
September 20, 2022, the most since February. The overall slaughter pace so far 
in 2022 is running up 1.5% from a year ago and was steady at 667,000 last week. 
Dow Jones estimated Tuesday's cattle slaughter at 127,000, an active pace and 
the same as last week. Tuesday morning's choice boxed beef prices were up $1.07 
at $248.91, while selects were down $1.27 at $222.08 with a total load count of 
90. Choice boxed beef is near its lowest prices in a year and a half, curiously 
low for an economy in the midst of an inflation problem.

FEEDER CATTLE:

   November feeder cattle are trading down $1.55 at $175.50, pressured again by 
concerns of slower economic growth ahead and by December corn trading 5 cents 
higher Tuesday morning. Technically, November feeder cattle broke below their 
100-day average one week ago and prices have slid lower since as it's difficult 
to pencil out a positive return for feeders when the future of retail beef 
demand is not looking good. For the November contract, the May low near $171 
may offer support, depending on how retail demand weathers the current storm. 
The CME Feeder Cattle Index ended at $178.71 Friday, tracking near the 
September price.   

LEAN HOGS:

   December lean hogs are trading down $2.95 at $76.45, extending Monday's new 
seven-month low. Tuesday morning's carcass value of $102.07 is 61 cents higher, 
but still near its lowest prices since January. The lower prices should 
actually serve pork well at the retail counter and help the slaughter pace stay 
active, even if the economy slows moving forward. Thursday afternoon's Hogs and 
Pigs report from USDA will get traders interest and offer some direction on 
where inventories currently stand. Private estimates are looking for Sept. 1 
hog inventory to be down roughly 1.6% from a year ago, a generally supportive 
outlook for hog prices in an economy with difficult challenges ahead. Tuesday 
morning's Daily Direct Hog report showed the swine formula base down to $93.76. 
Negotiated hogs had no morning update and were last seen at $91.88 Monday 
afternoon. USDA expects pork production to increase 8.6% in the fourth quarter, 
but it is difficult to see how that will happen without increased inventory. 
Technically, Monday's new seven-month low was a bearish break in prices that 
should lead to more noncommercial selling. Friday's CFTC report showed 
noncommercials holding 89,178 contracts long as of Sept. 20, a big position to 
hang on to when prices are extending new lows.

   Todd Hultman can be found at Todd.Hultman@dtn.com

   Follow him on Twitter @ToddHultman1

    




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