GENERAL COMMENTS:
Livestock futures were unable to hold on to
strong gains seen early Thursday. By closing bell, live cattle futures
closed mixed, while lean hog futures eroded in last-minute trade. The
cattle complex continues to remain oversold, but most traders are
staying on the sidelines following the wide swings over the last week.
Cash cattle trade remains quiet following light-to-moderate trade in the
South on Wednesday at $105 per cwt. This is generally $5 per cwt lower
than last week's levels. A few scattered bids are seen through the day
at $105 live in the South and $170 per cwt dressed in the North. It
appears that any additional trade will hold out until Friday. It is
uncertain whether feeders will unload cattle at current bids or be
willing to carry larger showlists into next week. Most asking prices are
seen at $107 and higher in the South and $175 in the North. The
National Daily Direct afternoon hog report was $1.08 lower ($61 to
$73.75, weighted average $71.25) on 9,786 head sold. Corn futures
bounced higher in limited late-day buying with September up 1 3/4 cents.
Stock markets are mixed in light trade with the Dow is 67 points higher
and the NASDAQ down 6 points.
LIVE CATTLE: Futures closed $0.27 lower to $0.65
higher. Nearby live cattle futures remain stuck in a narrowly mixed
trading range. The October futures contract inched 2 cents higher.
Prices stabilized at the end of the session, but traders continue to
focus on the inability to push prices back above $100 per cwt. Although
trade was less bearish over the last two sessions, concern remains that
the weak market structure will limit significant market moves over the
near future. Trade volume Friday is expected to remain limited as
traders will likely focus on position-squaring following the wild price
swings during the week, rather than on establishing long-term market
direction. Beef cut-outs: higher, up $4.75 (select, $210.67) to up $3.78
(choice, $236.12) with good demand and light offerings, 79 loads (35
loads of choice cuts, 17 loads of select cuts, 7 loads of trimmings, 19
loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL: Steady with midweek
trade. Any additional end-of-the-week trade has been pushed into Friday
following limited interest from both sides Thursday. Following
light-to-moderate trade in the South Wednesday at $105 per cwt, the tone
of the market is set to be lower, but aggressive gains in wholesale
beef values may limit the downside market pressure. It is likely that
additional trade will be needed in most areas before the end of the
week, but it is uncertain how willing feeders will sell into the lower
market structure, versus holding onto cattle and adding them to next
week's showlists.
FEEDER CATTLE: Futures closed mixed, $0.10 lower
to $1.30 higher. Initial sharp gains faded the last two hours of trade.
Uncertainty remains as to just how much impact the fire at Tyson's
Kansas plant will have on overall slaughter numbers in the short and
long term. This will likely keep trade volatile and prices moving in
moderate-to-wide ranges over the next several weeks. Traders are also
expected to square positions over the next couple of days. CME cash
feeder index for 8/14 is unavailable at this time.
LEAN HOGS: Futures closed $0.15 to 1.77 lower.
Late-day pressure developed in lean hog trade on a lack of support in
the front-month October futures contract, which closed at $65 per cwt.
Although nearby contracts continue to hold above long-term support, the
inability to bring consistent fundamental support to the complex is
keeping the entire complex generally bearish. Due to continued trade
concerns with China, traders looked past increased sales to China in
Thursday's export sales report. The lack of gains in pork cutout values
has sparked increased weakness through the entire complex. Pork cutout
values continue to slowly erode despite narrowly mixed moves in primal
cuts. Pork cutout values fell $0.67 per cwt, moving to $88.23 per cwt on
253 loads. CME cash lean index for 8/13 is $79.86, down $1.09. DTN
Projected lean index for 8/14 is $79.34, down $0.52.
FRIDAY'S CASH HOG CALL: Steady to $1 lower.
End-of-the-week activity is expected to limit market direction through
the end of the week with traders looking for steady to weak price levels
Friday. Friday slaughter numbers are expected at 464,000 head. Saturday
runs are expected at 141,000 head.
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