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DTN Midday Livestock Comments 01/27 11:37

DTN Midday Livestock Comments 01/27 11:37

Southern Feedlots Holding Their Ground Midday Friday

Heading into Friday's afternoon, everyone will remain on pins and needles
watching the cash cattle market in the South and seeing who wins this round --
packers or feedlots?

ShayLe Stewart
DTN Livestock Analyst


It's been a long time since the cash cattle market has waited to trade until
Friday afternoon, and Southern feedlots are pushing the market to do exactly
that. With Southern feedlots unwilling to accept packers' current bids, its
seeming as though they'd be willing to roll the cattle over into next week
before they'd be willing to sell them for steady money. March corn is down 1
1/4 cents per bushel and March soybean meal is down $3.20. The Dow Jones
Industrial Average is up 50.44 points.


The standoff between feedlots in the South and packers has only intensified
as we are about to enter into Friday's noon hour, and still, the cash cattle
market in the South has yet to be traded. I commend the feedlots who are firm
in their asking prices and are unwilling to waiver and sell cattle for steady
prices. With supplies as thin as they are, feedlots know that they sit in the
driver's seat of this market. The real question is: How aggressive are they
going to drive this ship? Asking prices in the South remain firm at $157-plus
and at $250-plus in the North. The futures complex is anxiously waiting to see
who wins this round (because it's inevitable that this will become the market's
norm throughout 2023) but, in the meantime, the futures complex is trading
mildly higher. February live cattle are down $0.05 at $156.67, April live
cattle are up $0.25 at $160.77 and June live cattle are up $0.30 at $157.67.

Boxed beef prices are lower: choice down $0.21 ($268.54) and select down
$1.16 ($250.32) with a movement of 81 loads (51.53 loads of choice, 11.55 loads
of select, 6.32 loads of trim and 11.45 loads of ground beef).


With the corn complex trading mostly steady, the feeder cattle complex is
aiming to regain some position after closing mostly lower Thursday afternoon.
March feeders are up $0.42 at $183.25, April feeders are up $0.25 at $187.25
and May feeders are up $0.25 at $191.52. The cash cattle market is still in a
stiff stand off in the South as feedlots are unwilling to affect packers'
current bids. If the South is indeed able to trade cattle higher this week,
feeders will likely see that as a positive gesture.


The immediate lean hog contracts are trading lower but, from the June 2023
contract through the remainder of the 2023 calendar year, the contracts are all
trading higher as the market sees greater demand. February lean hogs are down
$1.02 at $76.00, April lean hogs are down $0.42 at $86.52 and June lean hogs
are up $0.42 at $103.47. It is somewhat surprising to see cash hog prices
slightly higher Friday morning as, typically, packers don't support the cash
market late in the week, and especially not when they were aggressive early on.
But given that packers were complacent in the cash market over the last three
weeks, it's apparent that they need to secure more inventory this week.

The projected lean hog index is delayed from the source. Hog prices are
higher on the Daily Direct Morning Hog Report, up $0.31 with a weighted average
of $70.64, ranging from $63.00 to $73.00 on 5,594 head and a five-day rolling
average of $71.04. Pork cutouts total 223.26 loads with 210.47 loads of pork
cuts and 12.79 loads of trim. Pork cutout values: down $1.42, $79.04.

ShayLe Stewart can be reached

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