GENERAL COMMENTS:
Strong buyer support developed in both cattle and hog trade Wednesday. Nearby hog futures led the complex higher as reports of China pork purchases continue to stimulate short-term trade expectations, along with hopes that a trade deal will be reached in October meetings between the U.S. and China. Beef values gained momentum as the first round of a Japan trade agreement was finalized, focusing on growing beef movements. The lack of packer movement in cash cattle trade midweek is indicating another late week of trade. Even though asking prices have remained and are holding at $104 to $105 in the South and $170 dressed in the North, the lack of even initial token bids from packers is creating some concern about overall cash market improvement despite futures gains. Uncertainty of how many cattle need to be bought in negotiated trade before the end of the week leading into early October is adding some additional cash market instability. It is expected that at least light to moderate trade will be needed in all areas before the end of the week, but where initial bids start over the next couple of days could set the tone for weekly trade. The National Daily Direct afternoon hog report was $1.98 higher ($40-$51, weighted average $47.95) with total volume reported at 13,671 head. Corn prices remained mixed Wednesday with December down 1/2 cent. Stock markets were higher in light trade with the Dow up 162 points and the NASDAQ up 83 points.
LIVE CATTLE
Futures closed $0.25 to $1.07 higher. Despite wavering early trader interest, support moved into nearby live cattle trade later in the session. The December contract led the complex higher, now looking to regain early August losses as traders focus on demand support and the potential that the number of market-ready cattle could slip over the coming weeks. The announced signing of a trade deal with Japan brought limited fanfare to the market, but it did help to create confidence that additional U.S. beef will move into Japan, which will help the short- and long-term demand outlook. Beef cutouts: mixed, up $0.17 (select, $189.83) to down $0.76 (choice, $214.63) with moderate demand and moderate to heavy offerings, 172 loads (76 loads of choice cuts, 41 loads of select cuts, 16 loads of trimmings, 39 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL
Steady. Limited market activity is expected early Thursday morning, although packer interest is expected to improve slightly despite being silent the first half of the week. Late-Friday trade is a strong possibility as feeders are not likely to quickly budge from current asking prices.
FEEDER CATTLE
Futures closed $0.32 to $1.05 higher. Despite early uncertainty and an attempt by traders to cover positions Wednesday morning, buyer interest returned to most feeder cattle trade later in the session. Support was most evident in early 2020 contract months with traders looking for increased beef demand during the first half of next year. The announcement that a trade deal with Japan is being signed is supportive for the beef complex both in the short term and long term, and helped to stabilize the market. CME cash feeder index for 9/24 is $140.03, up $0.23.
LEAN HOGS
Futures closed mixed, $0.25 lower to $2.57 higher. Aggressive support moved into lean hog futures as traders focused on reports China will be buying more U.S. pork products. Although no specific numbers can be confirmed at this point, the hope is that overall Chinese imports of U.S. pork will continue to grow. However, to this point, Europe has been the main beneficiary of pork exports to China. It is likely that additional buying will be seen in the next couple weeks leading up to early October trade talks in Washington. Any pork purchases are likely to be viewed as a "good will" gesture in order to gain momentum and hopefully progress in establishing a trade deal. Pork cutouts firmed on aggressive gains in picnic and belly cuts. Pork cutout values added $0.67 per cwt, moving to $70.41 per cwt on 336 loads. CME cash lean index for 9/23 is $54.82, down $0.31. DTN Projected lean index for 9/24 is $54.67, down $0.15.
THURSDAY'S CASH HOG CALL
Steady to $1 higher. Continued support through the futures trade and expected additional late-week gains are helping to solidify cash market support. Most bids are expected steady to 50 cents higher despite expected active weekend plant activity. Thursday slaughter numbers are expected at 478,000 head. Saturday runs are expected at 258,000 head.
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