October lean hog futures are leading the complex lower. With no new developments in the complex, traders are slowly backing away from previous gains, allowing a moderate market correction to develop. Cattle futures firmed early Thursday, but have since posted limited losses in light trade. Corn futures are lower in light trade with September 2 cents lower. Stock markets are lower in light trade. Dow Jones is 131 points lower with the NASDAQ down 32 points.
LIVE CATTLE:
Trade remains sluggish through live cattle trade as early gains quickly evaporated as limited selling activity moved into the complex. Losses are being kept to a minimum with most contracts 5 to 15 cents per cwt lower. Nearby live cattle futures remain at short-term resistance levels, although the short-term stability in the market is likely to limit additional strong buyer support unless increased demand develops long term. This could allow prices to hover in a narrow-to-moderate sideways trend over the near future. Cash cattle bids have redeveloped in some areas, with bids of $109 to $111 live and $180 to $182 dressed seen in Nebraska. All other areas remain quiet, although packer interest is expected to improve through the end of the day. Asking prices have firmed over the last couple of days at $113 and higher live and $186 to $187 dressed basis. Boxed beef cut-outs at midday are higher, up $0.17 (select) to up $0.12 per cwt (choice) with light movement of 49 total loads reported (31 loads of choice cuts, 13 loads of select cuts, no loads of trimmings, 4 loads of ground beef).
FEEDER CATTLE:
Feeder cattle trade has bounced higher and lower through the morning with nearby contracts still able to hold limited gains of 5 to 20 cents per cwt. The morning pullback in live cattle trade has started to erode deferred feeder cattle contracts at midday. Limited long-term direction is expected to be seen through the rest of the session, although traders are looking for a sense of stability at the end of the week. Recent softness in grain trade is likely to limit additional pressure to feeder cattle futures as traders account for shifts in production costs due to lower corn prices.
LEAN HOGS:
Lean hog futures are mixed to mostly lower with October through April futures posting firm losses as traders start backing away from the recent market rally. The unchecked market surge during July has allowed the market to become more unstable at the higher price levels. Although the overall tone of the market remains firm, the potential for a moderate-to-strong correction has been developing over the last couple of days. This is allowing October through February futures to post losses of $1 to $1.50 per cwt, although futures have backed away from session lows. It appears that markets may hold the lower pattern Thursday with limited long-term direction seen. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is $0.12 lower at $81.14 per cwt with the range from $68 to $87 on 9,219 head reported sold. Pork values shifted higher in limited volume. Pork cutouts added $1.45 per cwt at $82.88 per cwt with 145 loads traded. Lean hog index for 7/23 is $75.58, up $1.29, with a projected two-day index is $77.23, up $1.65.
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