Active gains have flooded the livestock complex Monday morning. President Trump mentioned that China is willing to return to the table concerning trade talks. This quickly sparked active buying in most markets. Cattle and hog futures surged to triple-digit gains, offsetting most losses seen late last week. Corn futures are lower in light morning trade. September corn futures are 2 1/4 cents lower. Stock markets are higher in active trade. Dow Jones is 250 points higher with NASDAQ up 84 points.
LIVE CATTLE:
Traders quickly reacted to a combination of fundamental and outside market factors Friday morning, leaving a wake of sharp losses in its path. A strong increase in beef inventory in July compared to June took the industry and market by surprise. While announcements by China that it would increase tariffs on $75 billion of imports has left outside markets struggling late in the week. This has created active pressure in all contracts with nearby futures holding $2 per cwt losses. Despite limit losses in feeder cattle trade, so far there has been no attempt to test daily limits, but the general weakness in the complex could quickly spark additional late-day pressure in all live cattle futures. Cash cattle markets remain quiet with show list distribution and inventory taking expected to be the extent of interest through the day. Trade may not develop until Wednesday or later, although both sides will likely desire to wrap things up sooner rather than later given the upcoming holiday week. With lower procurement schedules next week due to the holiday, cash trade may remain sluggish. Boxed Beef cut-outs at midday are higher, $0.07 higher (select) and up $1.58 (choice) with light movement of 43 total loads reported (18 loads of choice cuts, 14 loads of select cuts, 8 loads of trimmings, 4 loads of ground beef).
FEEDER CATTLE:
Strong gains have quickly redeveloped Monday morning in all cattle markets. September feeder cattle futures have posted $2.92 per cwt gains with increased underlying support seen through the entire livestock markets while traders are focusing on outside market support based on hopes and expectations that progress may develop over the near future concerning a trade agreement with China. The bullish cattle on feed report that posted 2% lower placement levels in July is helping to solidify additional interest through the complex.
LEAN HOGS:
Triple-digit gains in lean hog futures are leading the entire livestock higher with spot October futures using expanded trade limits and holding a $4.27-per-cwt rally. This underlying support is based on hopes that progress can or will be made in trade talks with China. The back-and-forth announcement of tariffs on each other seen Friday, sparked widespread market pressure in an already weak market structure. The potential that talks can be reestablished is giving hopes to most traders. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.28 at $64.19 per cwt with the range from $55 to $69.50 on 4,539 head reported sold. Pork values firmed following aggressive gains in rib cuts. Pork cutouts added $0.98 per cwt at $80.63 per cwt with 120 loads traded. Lean hog index for 8/22 is $75.94, down 1.10, with a projected two-day index at $74.50, down 1.44.
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