GENERAL COMMENTS:
Limited market interest was seen through most of the session, although a surge higher in lean hog futures just before closing bell added support. This move higher helped solidify additional gains in cattle futures, which posted moderate but firm gains at closing bell. Corn futures are higher in light trade. September corn futures are 4 1/2 cent higher. Stock markets are higher in light trade. Dow Jones is 346 points higher with NASDAQ up 169 points. Cash cattle markets still remain generally undeveloped with bidding becoming slightly more active Thursday afternoon. A few scattered deals have been reported at $113 live basis in Nebraska. There still is not enough trade to develop an accurate trend. Dressed bids in the North are $179 to $183 per cwt with $109 per cwt live basis in the South. Asking prices remain at or above $113 live in the South and $185 and higher in the North. National Daily Direct afternoon hog report is $1.52 lower with a weighted average of $72.01 per cwt. Full range of $62 to $75 per cwt on 5,591 head sold.
LIVE CATTLE: Slow but steady gains in live cattle futures Thursday ($0.15 lower to $0.55 higher). Gains over the last two trading sessions are not only moving prices slowly off recent market lows, but the ability to focus on slow but steady growth is expected to be building underlying support through the entire complex. The gains in all livestock futures are expected to spillover in the form of follow-through buying activity early Friday morning as commercial support may continue to be seen through the end of the week. The ability to close October futures above $106.22 for the week would likely spark additional bullish support early next week. Beef cut-outs: mixed, $0.34 lower (select, $192.37) and up $0.39 (choice, $216.88) with good to moderate demand and light offerings, 117 loads (50 loads of choice cuts, 34 loads of select cuts, 7 loads of trimmings, 27 loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL: Steady to $1 lower. Cash cattle trade remains sluggish, which should spark improved packer interest through the end of the week. Feedlot managers continue to hold tight to early asking prices, leaving a wide gap between bids and asking prices late in the week. It may be late afternoon before active trade develops.
FEEDER CATTLE: Commercial buyer support pushed futures higher ($0.30 to $0.72 higher). Late-day buying pushed feeder cattle futures to post moderate to firm gains despite the upward movement in grain trade. The ability of live cattle futures to move away from the narrowly mixed prices early in the session continued to spark underlying buying interest in nearby feeder cattle contracts. The most focus is on the October contract, although the lack of premium in all nearby trade is leaving traders unwilling to aggressively roll contract months at this point. There is currently a 40-cent price spread between all remaining 2019 contract months. CME cash feeder index for 8/7 is unreported at this time.
LEAN HOGS: Buying redeveloped Wednesday in lean hog futures, further expanding the volatile market swings across the complex ($0.37 lower to $2.62 higher). Active gains increased late Thursday afternoon in October 2019 through October 2020 contracts. October futures gained $1.02 per cwt, although nearly half the gains were seen in other deferred contracts, which sparked increased interest. Thursday's move higher was the first consecutive two-day gain since July 23. The ability to break out of the downward cycle over the next couple of days would be a huge momentum shift in lean hogs, even if prices do not move back to July highs. Pork values bounced higher with firm triple-digit gains in loin and belly cuts offset by strong pressure in all other primals. Pork cutout values added $0.29 per cwt, moving to $88.69 per cwt on 245 loads. CME cash lean index for 8/6 is $83.43, down 0.76. DTN Projected lean index for 8/7 is $82.85, down 0.58.
FRIDAY'S CASH HOG CALL: Steady to $2 lower. Continued cash market pressure is expected Friday morning. Despite recent gains in futures, packers appear to be focused on reducing production rates as well as lowering cash bids to protect margins. Most bids are expected steady to $1 per cwt lower. Friday slaughter numbers are expected at 452,000 head. Saturday runs are expected at 50,000 head.
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