GENERAL COMMENTS:
Wide-ranging losses were seen throughout the livestock trade Wednesday with nearby cattle futures ending down $1 to $1.60 per cwt. Hog futures stumbled lower with October through February contracts closing down the $3-per-cwt limit. Hope that renewed support will develop Thursday due to the start of a fresh month may not be enough to stabilize the market. Cash cattle activity was starting to trickle into the market Wednesday with light activity reported in Texas at $111 per cwt, while Northern trade has been reported at $114 live and $182 to $185 per cwt dressed. Additional trade is expected in all areas, though it may be delayed until Thursday or Friday. Asking prices are seen at $114 and higher in the South, while dressed trade is seen at $186 to $187 per cwt in the North. The National Daily Direct afternoon hog report was $2.18 lower ($70-$85, weighted average $80.30) on 10,153 head sold. Corn futures moved lower in moderate trade with September down 11 cents per bushel. The Dow Jones Index was 328 points lower with the NASDAQ down 98 points.
LIVE CATTLE: Live cattle futures settled $0.65 to $1.42 lower. Sharp losses quickly moved through live cattle trade Wednesday as traders focused on limit losses in lean hogs. Despite attempts to stabilize live cattle futures near recent highs, the widespread pressure seen in most commodity markets created softness in the complex late Wednesday. Strong pressure in the grain trade and triple-digit losses in the stock markets following a rate cut by the Federal Reserve added to the market instability Wednesday. Market pressure could continue as traders look for longer-term direction and hopefully stability during early August. Beef cut-outs: lower, down $1.44 (select, $189.69) to down $0.49 (choice, $213.54) with light demand and moderate offerings, 156 loads (59 loads of choice cuts, 52 loads of select cuts, 16 loads of trimmings, 30 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL: Steady to $1 lower. Following limited trade Wednesday in a few areas, packer interest is expected to slowly improve through the end of the week. Initial interest is expected sluggish early Thursday with asking prices holding through the week.
FEEDER CATTLE: Widespread livestock market losses overshadowed pressure in the grains market, leaving prices unsupported. Futures closed $1.00 to $1.60 lower. Losses quickly flooded into feeder cattle trade with nearby contracts falling $1.50 to $1.60 per cwt, erasing Tuesday's gains. Traders looked past lower production costs, which helped bring limited support earlier in the week, and quickly liquidated positions at the end of the month. The concern that additional market weakness will develop in early August added pressure to nearby and deferred feeder cattle contracts. CME cash feeder index for 7/30 is $142.15, up $0.07.
LEAN HOGS: Lean hogs closed limit lower (down $1.55 to $3.00). Any hint of end-of-the-month short-covering quickly eroded as traders focused on liquidation through the end of Wednesday's session. This pushed October through February futures contracts down $3 per cwt, locked in limit losses most of the afternoon. All contracts settled triple digits lower, with October closing at $71 per cwt. This puts nearby contracts in danger of breaking through support levels seen during early July. Even though support remains at $68 per cwt, Wednesday's market action proves that a $3-per-cwt market cushion can quickly erode, especially since expanded trading limits will be available to traders Thursday. A move below this level would lead to an even more bearish market tone through the entire complex. Pork values firmed on triple-digit gains in butt and belly cuts. Pork cutout was up $0.41 per cwt to $87.50 per cwt on 250 loads. The CME cash lean index for 7/29 is $82.10, up $1.86. The DTN Projected Lean Index for 7/30 is $83.41, up $1.31.
THURSDAY'S CASH HOG CALL: $1 lower to $1 higher. Sharp pressure in futures trade is expected to quickly cool packer bids through the end of the week. This could spark additional early month pressure, although at this point, most bids are expected steady to firm based on the need to procure additional hogs. Thursday slaughter numbers are expected at 475,000 head. Saturday runs are expected at 34,000 head.
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