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DTN Midday Livestock Comments          08/12 11:53

   Friday's WASDE Report Supports Higher Futures for Cattle 

   Friday's WASDE report shared supportive news for the cattle complex and 
mixed news for the hog market. 

ShayLe Stewart
DTN Livestock Analyst


   Friday's WASDE report was extremely supportive to the cattle complex and 
mildly supportive to the pork sector. As the livestock complex trades mixed 
into Friday afternoon, next week could trade higher yet again as support seems 
to be seeping into the market from nearly every angle. December corn is up 3 
3/4 cents per bushel and December soybean meal is up $7.30. The Dow Jones 
Industrial Average is up 191.39 points.


   After an exhilarating couple of days, the live cattle complex is trading 
slightly lower in its nearby contracts heading into Friday afternoon, while the 
deferred months cling to slightly higher prices. The market's advancement came 
as the cash cattle market shot $2.00 to $4.50 higher, which gave traders all 
the fundamental support they needed to work the contracts higher. Usually, the 
live cattle market keeps a close eye on corn prices, even though market-ready 
fat cattle have limited days left on feed. But with the strong advancement in 
the cash market combined with strong trade in the boxed beef market and 
Thursday's supportive export report -- the live cattle market isn't batting an 
eye at Friday's 1- to 2-cent run in the corn market. August live cattle are up 
$0.15 at $140.45, October live cattle are up $0.17 at $144.92, and December 
live cattle are up $0.12 at $150.95. Throughout the week, cash Southern live 
cattle have traded for mostly $140, roughly $3.50 to $4.50 higher than last 
week's weighted average. And Northern dressed cattle traded for $229 to $230, 
which is $2.00 to $3.00 higher than last week's weighted average. Given that 
the market has already seen a big movement of cattle trade, it's likely that 
Friday only sees some light clean-up trade develop ahead of the weekend.

   Friday's WASDE report shared supportive news for the cattle complex. The 
forecast for 2022 red meat and poultry production is slightly higher from last 
month as stronger beef and broiler forecasts offset the lower trend in pork and 
turkey. Beef production grew by 68 million pounds from a month ago, pushing 
2022's total production to an estimated 27,990 million pounds as slaughter 
speeds have continued to run aggressively. Beef production for 2023 grew 
substantially from last month's report as an additional 325 million pounds were 
added, which puts the year's estimated production at 26,265 million pounds. 
Both the third and fourth quarters of 2022 saw increases from July's WASDE 
report as third quarter steer prices are expected to average $140 (up $1.00) 
and fourth quarter prices are expected to average $147 (up $2.00). The first 
quarter of 2023 saw a $1.00 increase as steers are expected to average $151, 
but the second quarter held steady for 2023 steer prices at $152. Beef imports 
in 2022 were reduced by 56 million pounds, while beef exports grew by 65 
million pounds. Beef imports for 2023 saw no changes from July's report, but 
2023's estimated exports grew by 40 million pounds.

   Boxed beef prices are higher: choice up $0.22 ($263.32) and select up $2.34 
($239.80) with a movement of 49 loads (23.26 loads of choice, 7.48 loads of 
select, 7.71 loads of trim and 10.77 loads of ground beef).


   As the corn market leans into its fourth consecutive day of higher trade, 
the feeder cattle market's attitude is lackluster. August feeders are up $0.17 
at $180.12, September feeders are down $0.57 at $184.02 and October feeder 
cattle are down $0.40 at $186.45. Even while the live cattle market finds 
tremendous support this week having traded higher throughout its contracts and 
having seen a $2.00 to $4.50 gain in the cash market -- the feeder cattle 
complex is fixated on the corn market's surge as feedlots have no room in their 
breakeven equations for higher feed costs. Nevertheless, the market is expected 
to keep this grim tone through closing as the grain sector pushes higher prices 
into Friday's afternoon.


   After rallying to new contract highs in several of the months, the lean hog 
complex is trading lower into Friday's afternoon as traders seem to be stepping 
away from the market ahead of the weekend. October lean hogs are down $1.17 at 
$99.90, December lean hogs are down $0.42 at $90.20 and February lean hogs are 
up $0.05 at $92.77. Friday's WASDE report shared supportive news for the third 
and fourth quarters of 2022 as the market will likely continue to see strong 
interest in cash market as market supplies are thin.

   The projected CME Lean Hog Index is unavailable at this time. Hog prices are 
lower on the Daily Direct Morning Hog Report, down $0.63 with a weighted 
average of $118.14, ranging from $114.00 to $133.00 on 3,819 head and a 
five-day rolling average of $124.19. Pork cutouts total 222.55 loads with 
206.91 loads of pork cuts and 15.63 loads of trim. Pork cutout values: down 
$0.01, $123.30.

   Friday's WASDE report shared mixed news for the hog complex. Pork production 
in 2022 fell by 81 million pounds as pork production was lowered on the third 
quarter as market-ready hogs are in extremely short supply. With market-ready 
hogs being in short supply, quarterly price projections for both the third and 
fourth quarters of 2022 were raised from July's report. Hog prices in the third 
quarter are expected to average $85 (up $9.00) and fourth quarter prices are 
expected to average $69 (up $3.00). No changes were made to the price 
projections in 2023. Pork imports for 2022 fell slightly from July's report to 
1,547 million pounds, which is 6 million pounds less than a month ago. Pork 
exports for 2022 were reduced slightly to 6,574 million pounds, down just 2 
million pounds from a month ago. Both pork imports and exports for 2023 were 
unchanged from a month.

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

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