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DTN Midday Livestock Comments          10/28 11:34

   Lean Hogs Take Advantage of Strong Exports

   The strong export report undoubtedly helped spur on the lean hogs' strong 
rally, but the strong sales of beef weren't enough to give the live cattle 
contracts an edge on Thursday's trade.

ShayLe Stewart
DTN Livestock Analyst


   The lean hog market has battled a tough week, but upon seeing Thursday's 
strong export report, the market has trudged higher and stole the spotlight of 
the livestock sector. Meanwhile, both the live and feeder cattle contracts are 
sitting on the backburner of the market, drifting lower as traders look 
elsewhere. December corn is up 5 1/2 cents per bushel and December soybean meal 
is down $0.20. The Dow Jones Industrial Average is up 182.60 points and NASDAQ 
is up 176.65 points.


   The live cattle market is retracting after its strong advancements earlier 
this week. December live cattle are down $0.75 at $130.82, February live cattle 
are down $0.60 at $136.35 and April live cattle are down $0.40 at $138.95. 
After posting aggressive gains earlier this week, traders have seemed to pause 
their aggression and are looking over the fence to the lean hog market, where 
the day's excitement seems to be. Even though the futures market is trending 
lower, the live cattle market's morale is still strong. This past week, cash 
cattle prices have jumped significantly, processing speeds have run 
aggressively, and Thursday's export report showed positive figures as well. 
There isn't much to talk in regard to cash cattle, as its likely that the bulk 
of this week's trade is done with. Thus far, Southern live cattle have sold for 
$124 to $126 which is steady to $2.00 stronger than last week and Northern 
dressed cattle sold anywhere from $196 to $200, which is $4.00 more than what 
they sold for last week. Some clean-up trade could develop before the week's 
end but it's most likely that the week's trade is done for.

   Beef net sales of 19,200 mt reported for 2021 were up noticeably from the 
previous week and up 39% from the prior four-week average. The three largest 
buyers were South Korea (6,200 mt), China (4,500 mt) and Japan (2,800 mt).

   Boxed beef prices are mixed: choice down $0.99 ($282.64) and select down 
$0.49 ($262.18) with a movement of 61 loads (22.33 loads of choice, 15.75 loads 
of select, 11.62 loads of trim and 11.67 loads of ground beef).


   The feeder cattle market has sunk lower thus far through Thursday's trade 
and it's likely that the market will continue to do so if corn prices continue 
to trend green. With nearby corn contracts posting another $0.06 rally, feeders 
are having to refigure their input costs as they're wanting to buy more calves 
with the market's positive outlook for the live cattle market, but the revenue 
made has to outweigh the cost of getting the cattle to end weight. November 
feeders are down $0.32 at $158.15, January feeders are down $0.75 at $158.20 
and March feeders are down $0.75 at $159.45. Even though feeders are having to 
push the pen to paper and need to know where their inputs lie, the uptick in 
the live cattle market has sent strong undertones throughout cattle complex and 
feeders are paying close attention. Strong sales have been reported throughout 
the country this past week as feedlots are anxious to buy calves. Calves that 
come to town with a vaccination program and that have been weaned are ringing 
the bell!


   China wasn't listed as one of the top three buyers in the morning's export 
data, but a debuting of strong sales is just what Thursday's market needed to 
scale higher. December lean hogs are up $2.77 at $74.80, February lean hogs are 
up $2.37 at $76.70 and April lean hogs are up $1.67 at $80.00. Thursday's 
slaughter is only expected to amount to 478,000 head, which isn't what the 
market needs. These slower processing speeds are crippling producers' ability 
to stay current and give packers more reason to wane the cash market lower. The 
strong export report will most likely keep the market positive throughout the 
day's close, but the problems of supply outpacing demand remain.

   The projected lean hog index for Oct. 26 is down $0.99 at $81.67, and the 
actual index for Oct. 25 is down $0.32 at $82.66. Hog prices are lower on the 
National Direct Morning Hog Report, down $0.55 with a weighted average of 
$62.21, ranging from $61.00 to $65.00 on 6,843 head and a five-day rolling 
average of $63.10. Pork cutouts total 129.88 loads with 108.42 loads of pork 
cuts and 21.46 loads of trim. Pork cutout values: up $7.28, $100.75.

   Pork net sales of 29,500 mt reported for 2021 were up 41% from the previous 
week but down 1% from the prior four-week average. The three largest buyers 
were Mexico (16,900 mt), Japan (3,300 mt) and Canada (2,800 mt).

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

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