Thursday Closing Livestock Market Summary - Mixed Trade Stabilizes Livestock Futures

GENERAL COMMENTS

Cash cattle trade is undeveloped at this point Thursday afternoon with packers showing more interest as the week has continued, but doing very little to improve bids so that feedlot managers may become more interested. Bids through the day remain at $168 to $170 per hundredweight (cwt) dressed basis and $106 per cwt live basis. Asking prices have held at $175 and higher dressed basis and $111 to $112 per cwt live. At this point, it is likely that trade will be pushed off until midday Friday or later as traders focus on outside market direction and the potential to spark trade activity through nearby futures. According to the closing report, the national hog base is $1.22 higher compared with the Prior Day settlement ($42-$53, weighted average $48.92). Corn futures are lower in light activity with September futures closing 2 cents lower Wednesday. Dow Jones Index is 105 points higher with the Nasdaq up 44 points.

LIVE CATTLE

Sluggish trade activity left markets mixed in a moderate trading range with futures closing $0.67 lower to $0.47 higher. Early price pressure in nearby contracts seemed to limit the ability of buyers to move back into October or December contracts Thursday. Given that cash cattle markets remain undeveloped and wholesale beef values have struggled to find support, buyer interest in nearby futures has been lagging. Front-month October live cattle futures posted a $0.67 loss, backing away from short-term highs set Thursday. This move reinforced the long-lasting sideways trend in the live cattle complex. With prices unable to push above $112 per cwt in the front-month October contract, this wide gap may continue, giving traders reason to wander in this wide price range. Beef cut-outs: lower, down $0.03 (select, $197.24) to down $0.75 (choice, $204.04) with moderate demand and offerings (76 loads of choice cuts, 21 loads of select cuts, 17 load of trimmings, 17 loads of coarse grinds).

FRIDAY'S CASH CATTLE CALL:

Steady. Packer interest has improved through the end of the week, although little to no price support has developed over the last couple of days. At this point, bids Friday are likely to be floated again at $106 per cwt live and $168 to $170 dressed. With asking prices not budging and well above these levels, it could be mid to late Friday before trade develops.

FEEDER CATTLE:

Early market uncertainty quickly faded with additional buyer support trickling back into the market. Futures closed $0.30 to $0.75 higher. Late-day buyer support slowly moved back into the feeder cattle complex, which helped to spark some additional underlying support across the market. The continued pressure in grain trade is pointing to lower production costs, which typically remains a bullish sign for feeder cattle futures. The most aggressive support remains in deferred contracts, which continue to hold a moderate-to-firm discount to nearby trade based on expected availability of cattle through early 2019. CME cash feeder index for 9/12 is $152.60, down $0.03.

LEAN HOGS:

Limited direction developed in lean hog futures Thursday following morning price pressure. Futures closed mixed, $0.15 lower to $0.65 higher. The wide-ranging market swings over the last couple of days have caused some additional adjustments in all contracts. Early price pressure moved front-month futures nearly $1 per cwt lower. But a lack of selling activity left markets generally supported, with most contracts holding gains of 20 to 40 cents per cwt by the close. The underlying firm support of cash hog prices and increasing pork values is helping to limit futures losses through the week. Pork values inched higher with pork primals mixed in a wide price range, as triple-digit price swings developed in several markets. Pork cutout values gained $0.19 per cwt, moving to $71.05 per cwt. CME cash lean index for 9/11: $48.49, up $0.94. DTN Projected lean index for 9/12: $50.08, up $1.59.

FRIDAY'S CASH HOG CALL:

$1 to $2 higher. Continued firm cash buyer support is expected to return to the market Friday morning as packers try to manage around Hurricane Florence challenges. Although some additional market firmness is expected through the end of the week, concerns of reduced production capacity may limit bids. Friday runs are likely to 412,000 head. Saturday slaughter numbers are expected at 162,000 head.