GENERAL COMMENTS:
Earlier this week it seemed like the week's sole attention was going to align with the lean hog complex, leaving the cattle complex to drift merely lower. But as the week's cash cattle trade developed for stronger money, traders noticed the underlying support and upon Friday's $4.00 cash cattle jump, the markets rallied. Hog prices closed lower on the National Direct Afternoon Hog Report, down $2.35 with a weighted average of $60.26 on 8,722 head. December corn is up 3 1/4 cents per bushel and December soybean meal is up $6.80. The Dow Jones Industrial Average is down 244.69 points and NASDAQ is down 117.00 points.
From Friday to Friday, livestock futures scored the following changes: October live cattle up $1.83, December live cattle up $1.95; September feeder cattle up $0.88, October feeder cattle up $1.85; October lean hogs down $0.08, December lean hogs down $2.48.
LIVE CATTLE:
Upon seeing the strength in the cash cattle market, the live cattle complex rallied $0.05 to $0.57 higher and successfully kept the momentum through closing. October live cattle closed $0.57 higher at $107.35, December live cattle closed $0.52 higher at $111.85 and February live cattle closed $0.32 higher at $116.07. Friday's slaughter is estimated at 111,000 head, 8,000 head less than a week ago and 5,000 head less than a year ago. Saturday's slaughter is projected to be around 55,000 head.
This past week was a prime example of how price discovery can work when feeders work together. Early in the week, trade was idle, packers were lackadaisical and feedlots weren't overly ambitious about establishing their asking prices because they knew this week was going to be a waiting game. Monday and Tuesday were both idle days, Wednesday's Fed Cattle Exchange didn't move any cattle, at which point packers upped their bids and bought the first round of cattle for the week, for $2.00 higher than last week. After Wednesday's trade was noted, it was evident that there still needed to be more cattle sold, but the question was, who is going to give in? Feedlots were bound and determined to get their asking prices and sat current on their showlists, which gave them some much needed leverage. The real question was how bad packers wanted cattle this week. With boxed beef prices lower throughout most of the week, no one really anticipated trade to scale higher come Friday. But packers needed cattle more than we assumed as they called for delivery as early as next week on some of the pens. Friday morning cattle traded in Nebraska for $165 ($4.00 higher than last week's average) and live cattle sold for $104 ($3.00 higher than last week's business).
Boxed beef prices closed higher: choice up $0.59 ($215.64) and select up $0.55 ($203.94) with a movement of 147 loads (83.84 loads of choice, 20.79 loads of select, 28.42 loads of trim and 13.45 loads of ground beef).
MONDAY'S CASH CATTLE CALL: Steady. Packers aren't going to want to pay anything more than what they absolutely have to next week. But given that feeders committed upwards of 80,000 head (Monday's report will solidify exactly how many sold), feedlots managed to lock in some more leverage this week giving them the opportunity to set the bar higher.
FEEDER CATTLE:
Feeder cattle contracts rallied as the cattle complex saw a boost from the morning's stronger cash cattle trade. September feeders closed $0.95 higher at $140.87, October feeders closed $0.97 higher at $142.42 and November feeders closed $0.32 higher at $142.52. Heading into next week posts a lot of questions for the cattle market -- was this week's higher trade towards the tail end of the week a last-minute opportunity or does the stronger trade have enough support to carry into next week?
At Herreid Livestock Market in Herreid, South Dakota, compared to a week ago, the best test on steers was the 800- to 850-pound weight group and those also weighing 951 to 1,050 pounds, which sold $1.00 to $5.00 higher, and steers weighing 901 to 950 pounds sold steady to $1.00 higher. There wasn't enough of a test to accurately portray a trend on heifers. There was ample demand again this week for the market's yearlings and there was a large crowd in the stands willing to buy the right type and kind. The CME feeder cattle index 9/17/2020: up $0.97, $142.18.
LEAN HOGS:
Rounding out the week, the lean hog complex saw some advancement in the deferred contracts, but the nearby contracts traded mildly lower. October lean hogs closed $0.02 lower at $66.50, December lean hogs closed $0.10 lower at $63.52 and February lean hogs closed $0.35 higher at $68.55. Even though the day's cash price dropped $2.35, packers still purchased over 8,500 head negotiated and the week's ending cutout value closed slightly higher. Heading into next week, the market is going to anxious to see if export demand is going to surface. Pork cut outs totaled 389.73 loads with 345.89 loads of pork cuts and 43.84 loads of trim. Pork cutout values: up $0.50, $87.53. Friday's slaughter is estimated at 468,000 head, 12,000 head less than a week ago and 26,000 head more than a year ago. Saturday's kill is projected to be around 193,000 head. And Thursday's hog slaughter was revised to 470,000 head. The CME lean hog index 9/16/2020: up $1.42, $67.84.
MONDAY'S CASH HOG CALL: Higher. Even though the market trended slightly lower this week, there's still a lot of hope for upside potential in export demand.
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