Wednesday Closing Livestock Market Summary - Commercial Buying Pushed Feeder Cattle Futures Higher

GENERAL COMMENTS

Cash cattle trade remained generally quiet Wednesday afternoon with just a few early bids in Kansas at $103. These bids firmed slightly from earlier in the day, but are well below asking prices, so are getting very little interest. Packers are likely to become much more aggressive Thursday, but we may not see trade until Friday. Asking prices are still hard to pin down, but expected to be around $107 to $108 live basis, and $168 to $170 dressed. The Fed Cattle Exchange Auction report Wednesday listed a total of 1,240 head, with 125 actually sold (with the weighted average price of $163.00), 1,016 head listed as unsold, and 99 head listed as PO. The state by state breakdown looks like this: Kansas 442 total head, with 0 head sold, 343 head unsold, 99 head listed as PO ($103.25); Nebraska 221 total head, with 0 head sold, 221 head unsold, and 0 head listed as PO; Texas 412 total head, with 0 head sold, 412 head unsold, and 0 head listed as PO; Colorado no cattle reported in this area; Iowa no cattle reported in this area; other states (South Dakota, Missouri) 165 total head, with 125 head sold (South Dakota) at $163.00, 40 head unsold, and 0 head listed as PO. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 680 head total (live), no sales; 1-17 day delivery 174 head total (live), no sales; 1-17 day delivery 346 head total (dressed), 125 head sold, with a weighted average price of $163.00; 1-17 day delivery 40 head total (Holsteins), no sales. According to the closing report, the national hog base is $1.15 lower compared with the Prior Day settlement ($56.50-$64.00) weighted average $60.78. Corn futures moved higher in light activity. September futures were 2 cents higher Tuesday. The Dow Jones Index is 56 points higher with the Nasdaq up 17 points.

LIVE CATTLE

Light to moderate buyer support trickled into live cattle futures following the late-day rally in feeder cattle futures ($0.27 to $0.75 higher). Traders continue to focus on support levels set through the end of August. Buyers seen to be focusing on the potential of firming beef values, even though holiday demand is now in the rear-view mirror. The most aggressive buyer support developed in deferred contracts based on the support of trader interest in feeder cattle and expectations that long-term support will redevelop across the market. Large beef supplies remain available to the market but traders are confident with their ability to clear this product both near- and long-term. Beef cut-outs: higher, $0.20 higher (select, $190.67) to up $0.48 (choice, $192.93) with light to moderate demand and moderate to heavy offerings (81 loads of choice cuts, 27 loads of select cuts, 18 loads of trimmings, 42 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady to $2 lower. Overall feedlot trade remains generally undeveloped with just a few bids offered in Kansas at $103 per cwt. The light trade seen on the Fed Cattle Exchange did little to nothing to spark market interest at midweek, and may not bring active movement into the market early Thursday. It is expected that more packer interest will develop Thursday, but it could be Friday before active trade is seen.

FEEDER CATTLE:

Buyer support stepped into the feeder cattle complex at the end of the session, offsetting early week pressure ($0.80 to $1.50 higher). Even with recent shifts in the feeder cattle market, little technical market direction is developing. Nearby contract prices are hovering between $143 and $144 per cwt and continue to wander in a generally wide range between $139 and $146 per cwt. This trend could continue over the next few weeks or even months as prices have a lot of room to shift on fundamental market data through this price range. CME cash feeder index: 9/5: $145.85, up $0.58.

LEAN HOGS:

Lean hog futures inched higher in most contracts ($0.20 lower to $0.37 higher) after spending most of the session wandering on either side of unchanged. Triple-digit gains over the last several days have created widespread commercial interest in the market. However, traders seemed to take a breather at midweek, focusing on positioning as they adjust for the future and try to focus on potential fundamental shifts that may be developing in the coming weeks. Carcass values turned firmly lower following a sharp $7.45 per cwt tumble in belly price while all but picnic and ham primals moved lower Wednesday. Pork cut-out: $83.77 down $1.19. CME cash lean index for 9/1: $71.36, down 1.03. DTN Projected lean index for 9/5 $70.33 down $1.03.

THURSDAY'S CASH HOG CALL:

Steady to $1 lower. Continued pressure is expected early Thursday morning by packer bids with the initial trading range expected to be steady to $1 per cwt lower. Bids are likely to be scattered through this range as packers try to aggressively buy for the heavy weekend activity due to the holiday that kept plants dark Monday. At this point, it appears that gaining access to market-ready hogs will not become a significant problem over the near future. Thursday plant runs are set at 450,000 head with Saturday numbers pegged at 375,000 head.