Thursday Closing Livestock Market Summary - Lean Hog Futures Explode Higher Thanks to Renewed Hopes for US-China Talks

GENERAL COMMENTS

The cash cattle trade was little more than a staring contest between bids and asking prices (e.g., $108 bid live versus $112-$114 asking prices). According to the closing report, the national hog base is $0.59 lower compared with the Prior Day settlement ($40-$43, weighted average $41.54). Corn futures closed nearly 4 cents higher, powered by encouraging export sales and spillover enthusiasm in the bean trade regarding the possibility of revitalized trade talk with China later this month. The stock market soared on the news U.S. and China negotiators may soon be ready to sit down and end ongoing trade disputes. The Dow surged by 396 points with the Nasdaq up by 32.

LIVE CATTLE

Generally speaking, live cattle futures closed moderately higher (i.e., up 20 to 55). Spot August closed unchanged at $108.32, steady with many bids seen around the country but roughly $3 below last week's 5-area steer weighted average. Deferred issues were supported by short-covering and spillover buying from the hog market. Beef cut-outs: mixed, up $0.85 (select: $201.46) to off $0.85 (choice: $209.10) with light-to-moderate demand and offerings (57 loads of choice cuts, 35 loads of select cuts, 9 loads of trimmings, 16 loads of ground beef).

FRIDAY'S CASH CATTLE CALL:

Steady. Look for another round of late-week business with moderate volume and near-steady prices surfacing sometime between late morning and midafternoon.

FEEDER CATTLE:

Feeder contracts scored decent progress Thursday with prices up mostly 42 to 122 on the close. Nearby contracts outperformed deferreds, boosted a bit by the premium status of the cash index. CME feeder index 08/15: $150.29, off $0.05.

LEAN HOGS:

News that U.S. and Chinese negotiators were planning to resume trade talks later this month really worked to light a fuse in this market. Lean contracts surged higher with triple-digit gains. Indeed, October through February settled up the 300-point limit. Additionally, it appears that China authorities have documented another outbreak of African swine fever. While the numbers involved remained quite small (i.e., some 30 hogs died of the disease at the slaughterhouse in Zhengzhou in central Henan province, the Ministry of Agriculture and Rural Affairs said in a statement), just the fact of another occurrence of the highly contagious and deadly disease may have been enough to keep bears nervous. The carcass value closed lower, pressured by softer demand for ribs, picnics, loins and bellies. Pork cut-out: $67.63, off $0.86. Cash lean index: 08/14: $55.23, off $1.58 (DTN Projected lean index for 08/15: $54.21, off $1.02).

FRIDAY'S CASH HOG CALL:

Steady to $1 lower. Look for hog buyers to start late-week work with steady/weak bids. Some may still want to put numbers into Saturday, yet carcass value continues to fade.