GENERAL COMMENTS:
Losses continued across all livestock futures
markets Friday with triple-digit losses seen in cattle and hog markets
late in the day. Growing concerns about trade with China led to weakness
in lean hog futures, while a rebound in corn futures added to the
already bearish tone in feeder cattle trade through the end of the week.
From Friday to Friday, livestock futures scored the following changes:
Aug live cattle, off $1.00; Oct live cattle, off $2.08; Aug feeder
cattle, off $4.10; Sep feeder cattle, off $5.88; Aug lean hogs, off
$10.15; and Oct lean hogs, off $13.73. Limited cash cattle sales
continued to develop Friday, while prices were generally steady with
trade earlier in the week. Southern cash cattle trade was reported at
$111 per cwt, steady with early week trade, but $1 per cwt lower than
last week. Live trade in the North had developed in Nebraska and
Colorado by midafternoon Friday at $114.50 per cwt. This is generally
steady with last week's price levels. Bids of $182 to $183 per cwt
dressed basis in the North were still on the table, but it was uncertain
if additional trade would be seen before the end of the week. The
National Daily Direct afternoon hog report was $0.76 lower ($68 to
$84.50, weighted average $77.20) on 8,060 head sold. Corn futures were
higher in light trade with September up 6 3/4 cents. Stock markets were
lower in light trade with the Dow down 173 points and the NASDAQ down
123 points.
LIVE CATTLE: Live cattle futures closed $0.22 to
$$1.27 lower. Widespread weakness continued in livestock trade Friday
despite an early attempt by traders to stabilize prices. Technical
pressure is likely to be seen again early next week as traders return
from the weekend break. Concerns about increased tariffs on Chinese
products and potential retaliation offset any positive news by the White
House on increased beef exports going to the European Union. The market
is focusing less on the actual amount of product exported at this point
and more on the overall trade attitudes surrounding not only beef
products, but all commodities. Beef cut-outs: higher, up $1.29 (select,
$190.63) to up $0.49 (choice, $214.73) with moderate demand and
offerings, 98 loads (36 loads of choice cuts, 40 loads of select cuts,
10 loads of trimmings, 13 loads of coarse grinds).
MONDAY'S CASH CATTLE CALL: Steady. Activity
Monday is expected to remain quiet with the weekly routine of showlist
distribution and inventory-taking the primary activities.
FEEDER CATTLE: Feeder cattle futures closed
$1.60 to $3.55 lower. Technical pressure quickly developed Friday
morning following the shift lower over the last couple of days. Renewed
buying in corn futures sparked another round of price protection in
nearby and deferred feeder cattle trade with September through November
contracts closing $3.25 to $3.55 per cwt lower. This led to increased
liquidation in live cattle trade late Friday. CME cash feeder index for
7/31 is $142.23, up $0.08.
LEAN HOGS: Lean hogs closed mixed, $0.07 higher
to $3.00 lower. Early buying was seen in lean hog futures as traders
attempted to stabilize the recent losses. However, pressure throughout
the rest of the livestock trade quickly overshadowed the ability for
buyers to move back into the complex. Early triple-digit gains faltered,
turning into limit losses of $3 per cwt at closing bell. The continued
pressure in the complex has dashed any hope of a late-summer rally, as
prices have broken through long-term support the last two sessions,
leaving open the possibility of additional technical movements in the
coming days. Pork values shifted lower as primal cuts have been affected
by the pressure in futures and cash trade. Pork cutout values fell
$1.15 per cwt, moving to $86.64 per cwt on 323 loads. CME cash lean
index for 7/31 is $84.11, up $0.70. DTN Projected lean index for 8/1 is
$84.64, up $0.53.
MONDAY'S CASH HOG CALL: Steady to $2 lower.
Continued losses are expected early Monday with packer bids expected to
slide lower due to aggressive futures market pressure and generally weak
market direction. Most bids are expected to be $1 per cwt lower despite
the lighter buying needed for the reduced packer capacity with three
plants remaining dark Monday. Monday slaughter numbers are expected at
420,000 head.
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