GENERAL COMMENTS:
Lean hog futures found strong support throughout Wednesday's session, closing triple digits higher. The wide price swings are creating uncertainty, but the oversold market was able to create an upside opportunity. Cattle futures pulled back from early support, but closed mostly higher in limited trade. Limited cash cattle trade was starting to develop in the North with light trade reported in Nebraska at $183 per cwt dressed basis. These sales are listed for delayed delivery and to a regional packer, likely limiting the ability to establish a general market trend at this point. Live bids are seen at $109 in the South with dressed bids ranging from $181 to $185 per cwt. It is likely that any significant trade will be pushed off until Thursday or Friday. The National Daily Direct afternoon hog report was $1.51 lower ($64 to $78, weighted average $73.61) on 15,612 head sold. Corn futures were higher in light trade with September up 2 1/2 cents. Stock markets were higher in light trade with the Dow up 5 points and the NASDAQ up 40 points.
LIVE CATTLE: Futures closed $0.22 to $0.65 higher. Live cattle futures inched higher Wednesday morning, but then pulled back at the end of the session. Strengthening commodity markets and a late-day rally in stock markets limited previous interest in live cattle trade. Following a $3.50-per-cwt loss in the October contract over the last two weeks, the focus is being heavily placed on changing the course of the market. Wednesday's narrow gains help to limit the downside market movement, but consistent day-after-day buying is needed to significantly spark buyer interest and rekindle an upward market shift. Trade volume is expected to remain sluggish through the end of the week. But, given the recent firmness in beef values, continued late-week support is possible. Beef cut-outs: higher, up $0.06 (select, $192.71) to up $0.71 (choice, $216.49) with moderate demand and offerings, 152 loads (75 loads of choice cuts, 34 loads of select cuts, 13 loads of trimmings, 31 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL: Steady. Limited trade continues to trickle into the market, but at this point, not enough trade exists to establish a good market trend. Packer interest is expected to improve early Thursday in all areas.
FEEDER CATTLE: Futures closed $0.25 higher to $0.42 lower. Nearby contracts shifted lower in late-day trade after failing to sustain triple-digit gains seen earlier in the session. The lack of depth in the market is due to growing uncertainty about the grain trade. Despite firm support in live cattle futures, summer and fall feeder cattle trade was affected by the bounce higher in nearby corn prices. The narrow trading ranges seen midweek should help to rekindle a sense of stability through the cattle complex, potentially allowing for renewed support early Thursday. CME cash feeder index for 8/6 is $141.61, down $0.04.
LEAN HOGS: Futures closed $0.60 to $2.72 higher. Lean hog trade over the past week has gyrated higher and lower with triple-digit swings one day being countered the following day. This continued to be the case Wednesday, with triple-digit gains in nearby contracts attempting to offset Tuesday's losses. The back-and-forth swings have limited the downward price shifts, but the lack of consistent movement in either direction raises doubts that prices will move significantly higher over the near future. Given the economic and global trade issues, the complex continues to face significant bearish pressure. Buyers will have to string together multiple days of gains to build additional interest. Pork values slipped lower, while mixed market moves were recorded in primal cuts. Pork cutout values fell $0.33 per cwt, moving to $88.40 per cwt on 286 loads. CME cash lean index for 8/5 is $84.19, down $0.49. DTN Projected lean index for 8/6 is $83.43, down $0.76.
THURSDAY'S CASH HOG CALL: Steady to $2 lower. Firm pressure is expected to redevelop Thursday in cash hog trade. But the midweek firmness in futures trade and expectation that pork values may find additional end-of-the-week support could help to limit early bids. Most bids are expected steady to $1 per cwt lower. Thursday slaughter numbers are expected at 477,000 head. Saturday runs are expected at 44,000 head.
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