GENERAL COMMENTS:
Thursday was another day of sharp losses through the cattle sector, but by a slim margin, the lean hog complex closed modestly higher. Hog prices closed sharply lower on the National Direct Afternoon Hog Report, down $1.40 with a weighted average of $42.69 on 3,923 head. December corn is up 4 1/4 cents per bushel and December soybean meal is up $3.80. The Dow Jones Industrial Average is up 160.35 points, and the NASDAQ is down 39.72 points.
LIVE CATTLE:
The raw truth about the current live cattle complex is that, if you look over the charts, you'll notice that for the last two months, the market has slowly continued to climb out of the hole established earlier this spring. Adding modest gains here and there, the market has successfully rallied back to levels not seen since late February/early March. But in a week's time, the market has slumped lower and in a fierce way. It's understandable that with Labor Day about to be here and gone, the market is pulling back and developing short-term highs. But as we reflect upon 2020 and how it differs from years past, the market sits in turmoil wondering what the remainder of 2020 will bring.
October live cattle closed $0.85 lower at $106.15, December live cattle closed $1.17 lower at $109.35 and February live cattle closed $0.45 lower at $112.70. Thursday's cash cattle trade was disappointing, as the few that traded sold for lower money than the week's average. A small sampling sold in Iowa for $104, and an even lighter trade transpired in Nebraska for $103. There should be some more cattle that trade Friday before the week closes. Thursday's slaughter is estimated at 119,000 head -- steady with a week ago and 1,000 head more than a year ago.
Thursday's actual slaughter data shared that, for the week ended Aug. 15 was actually 1.69% higher than the previous report, totaling 643,681 head, but carcass weights were also higher. Actual live weights averaged 1,367 pounds (up 6 pounds), and actual dressed weights averaged 836 pounds (up 3 pounds).
Boxed beef prices close higher: choice up $0.09 ($231.54) and select up $0.15 ($214.26) with a movement of 110 loads (46.08 loads of choice, 11.89 loads of select, 38.77 loads of tri and 13.49 loads of ground beef).
FRIDAY'S CASH CATTLE CALL:
Steady at best. Packers have an inventory that allows them to buy themselves some time. If packers were short bought, it would be safe to assume that they would up their bids come Friday to secure the cattle they need, but over the last two months, packers have been extremely aggressive in their cash cattle purchases, which sits them in a position of leverage.
FEEDER CATTLE:
Feeder cattle contracts closed lower again Thursday afternoon as the market lacks ambition and knows all too well that the downward pressure isn't going to lift sooner rather than later. Adding to the downward pressure are corn prices that keep inching higher and higher, pasture conditions that continue to deteriorate and the weaker cash cattle trade this week that added pressure of its own. September feeder cattle contracts closed $0.55 lower at $141.22, October feeder cattle contracts closed $0.77 higher at $141.15 and November feeder cattle contracts closed $0.82 lower at $141.60. At Mitchell Livestock Auction in Mitchell, South Dakota, compared to a week ago, lower undertones were noted on feeder steers. Feeder heifers weighing 700 to 750 pounds sold mostly $4.00 lower, while the rest of the heifers sold with an unevenly tested steady undertone. Demand was good, but buyers are a little more cautious as the board continues to trend lower. The CME feeder cattle index 8/26/2020: down $0.58, $143.02.
LEAN HOGS:
A slightly stronger close above the $55.00 threshold is a better way to round out the day than what was anticipated earlier. The lean hog complex danced back and forth, not knowing if there was truly enough support to move the market higher or if the complex should just bow lower and trade beneath the $55.00 resistance. As the afternoon progressed and traders felt more confident in the market, the entire lean hog complex was able to close slightly higher. October lean hogs closed $0.17 higher at $55.72, December lean hogs closed $0.25 higher at $56.57 and February lean hogs closed $0.12 higher at $62.85. Pork cutouts totaled 369.62 loads with 328.88 loads of pork cuts and 40.74 loads of trim. Pork cutout values: up $0.88, $72.78. Thursday's slaughter is estimated at 482,000 head -- 6,000 head more than a week ago and 6,000 head less than a year ago. The CME lean hog index 8/25/2020: up $0.26, $56.86.
Thursday's actual slaughter data for the week ended Aug. 15 showed that hog slaughter was up 0.43% from the previous week, totaling 2,561,281 head. Hog weights held steady as live weights averaged 283 pounds and dressed weights averaged 211 pounds.
FRIDAY'S CASH HOG CALL:
Lower. Packers were aggressive early this week, but as the week nears the finish line, packers most likely bought enough to carry them through their weekend needs.
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