GENERAL COMMENTS:
Livestock futures turned the corner from aggressive early week losses as buyers quickly and boldly moved back into all markets. Despite light pressure in nearby live cattle contracts, the cattle market responded with active gains. August feeder cattle closed limit higher, sparking another session of expanded trading limits Thursday. Corn futures continued to shift lower in late-day pressure. September corn futures are 7 cents lower. Stock markets are sharply lower in active trade. Dow Jones is 756 points lower with NASDAQ down 236 points. Limited cash trade was reported Wednesday in the South at $105 per cwt. This is generally $5 per cwt lower than last week. A few bids in Nebraska at $105 live and $169 to $170 dressed, with a few $170 bids in Iowa. Asking prices are still somewhat hard to pinpoint, but the few reported appear to be around $185 dressed and $108 live in the North. More active trade is expected to be delayed until Thursday or Friday. National Daily Direct afternoon hog report is $0.56 lower with a weighted average of $69.47 per cwt. Full range of $61 to $73 per cwt on 13,356 head sold.
LIVE CATTLE: Strong deferred gains led a market rebound ($0.75 lower to $2.02 higher). Trade quickly moved higher in all but August and October futures as traders are trying to break out of the panic-driven price freefall of earlier this week. Fueled by cattle slaughter numbers not decreasing as much as previously feared due to a plant fire in Garden City, Kansas, and an extremely oversold market structure, triple-digit gains quickly developed in most contracts. Potential remains to spark increased late-week gains across live cattle futures with commercial and noncommercial traders stepping back into the market. Aggressive feeder cattle futures gains and continued weakness in grain markets are also likely to stimulate additional late-week buying interest. Beef cut-outs: higher, $5.34 higher (select, $205.92) and up $5.98 (choice, $232.34) with good demand and heavy offerings, 162 loads (59 loads of choice cuts, 35 loads of select cuts, 34 loads of trimmings, 33 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL: Steady with Wednesday trade. Additional packer interest expected to develop Thursday morning. Traders will closely monitor the direction of futures trade, which will give an indication if feeders will stick to current asking prices.
FEEDER CATTLE: Futures posted sharp up-the-limit daily gains in August futures. ($4.15 to $6.75 higher). Feeder cattle futures exploded higher Wednesday as the inability to bring additional liquidation to the market in the first few minutes of trade opened the gate for buyers to flood the market. Triple-digit gains developed in all markets with August futures locked in limit gains most of the session, while other nearby contracts posted $5 per cwt gains. Although August futures have limited open interest and light volume, the move higher in front-month futures still insures expanded trading limits available Thursday. Continued buyer support is expected back in the market through the end of the week, although intensity and strength are likely to be much more subdued over the next couple of days than what we saw Wednesday. CME cash feeder index for 8/13 is $139.89, down $0.12.
LEAN HOGS: Support redeveloped at midweek ($0.40 to 2.20 higher). October through February futures posted triple-digit gains. Stability in cattle futures helped bring renewed confidence to the entire hog complex, although nearby futures still remain near long-term lows and need additional support to break out of this weaker pattern. The continued concerns surrounding trade issues with China and the ability to export more pork will limit additional buyer support. Traders will focus on the export sales report Thursday morning, with hopes additional sales will have taken place. Pork cutout values continue to slowly erode following strong pressure in ham cuts. Pork cutout values fell $0.31 per cwt, moving to $88.90 per cwt on 263 loads. CME cash lean index for 8/12 is $80.95, down $0.80. DTN Projected lean index for 8/13 is $79.86, down $1.09.
THURSDAY'S CASH HOG CALL: Steady to $1 lower. The firmness in futures trade is expected to limit additional cash market pressure. Most bids are expected steady, although packers appear to be attempting to limit cash spending while maintaining steady supplies. Thursday slaughter numbers are expected at 477,000 head. Saturday runs are expected at 128,000 head.
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