General Comments
Rolling out of the long Labor Day weekend, the markets are favorable to the livestock sector as cattle contracts trade modestly stronger and most of the lean hog complex is rallying trader support. Even though the corn market is seeing some positive trade the livestock contracts are mostly firm in their position, not seeming to be too concerned with corn's midday trade though rising feed costs will be an important factor in the rest of this year's trade. December corn is up 1 1/4 cents per bushel and December soybean meal is steady. The Dow Jones Industrial Average is down 403.34 points and NASDAQ is down 301.86 points.
LIVE CATTLE
Last week's bearish live cattle trade thankfully hasn't carried into this week's trade as nearby contracts shoot over $1.00 higher into Tuesday's afternoon. October live cattle are up $1.00 at $105.45, December live cattle are up $1.15 at $109.62 and February live cattle are up $1.02 at $113.47. Holidays are refreshing for traders as it allows them time to step away from the market and come back and full-heartedly jump into trade, which cattlemen hope is the case in the direction that traders have chosen Tuesday morning. This week's cash cattle trade is anticipated to be lower as packers sit on a lofty supply. New showlists appear to be higher in Kansas, but lower in Texas and Nebraska/Colorado.
Last week's negotiated slaughter cattle sales totaled 80,959 head. Of that 45,262 head are committed for delivery in the next two weeks while the remaining 35,697 head are for delivery in the following 15 to 30 days. Last week's volume was the lowest number of cattle traded that the market's seen since 5/10/2020 when the market only moved 69,064 head.
Boxed beef prices are lower: choice down $0.12 ($225.73) and select down $0.09 ($209.21) with a movement of 57 loads (33.73 loads of choice, 13.63 loads of select, zero loads of trim and 9.38 loads of ground beef).
FEEDER CATTLE
Feeder cattle contracts are stepping into the new week fully higher with nearby and deferred contracts rallying mostly in the same range. September feeders are up $0.70 at $138.35, October feeders are up $0.67 at $139.17 and November feeders are up $0.72 at $140.25. Until the calendar flips over to the month of October, feeder cattle sales will most likely be limited with not enough cattle hitting the market to really draw buyer interest. In the meantime, cow-calf producers how that the market has enough time to sort itself out and leans into the fall run fully higher and optimistic.
LEAN HOGS
The lean hog market is trading with nearby contracts rallying modestly higher but deferred contracts lag behind. October lean hogs are steady at $59.85, December lean hogs are up $0.17 at $58.47 and February lean hogs are up $0.30 at $63.32. The nearby contracts continue to sell discounted to the deferred contracts so seeing the split trade is ok given that the nearby contracts are seeing the support. With a midday rally of $6.52 for the cutout, the market may be able to keep its support through closing with pork demand continuing to be strong.
The projected lean hog index for 9/4/2020 is up $1.90 at $60.53, and the actual index for 9/3/2020 is up $0.51 at $58.64. Hog prices are lower on the National Direct Morning Hog Report, down $0.40 with a weighted average of $45.53, ranging from $41.0 to $47.00 on 3,412 head and a five-day rolling average of $45.21. Pork cutouts total 179.32 loads with 164.51 loads of pork cuts and 14.81 loads of trim. Pork cutout values: up $6.52, $87.08.
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