GENERAL COMMENTS:
From Friday-to-Friday livestock futures scored the following changes: Aug live cattle up $0.92, Oct live cattle up $0.67, Aug feeder cattle up $1.67, Sep feeder cattle up $1.53, Aug lean hogs up $2.55 and Oct lean hogs off $0.42.
Despite back-and-forth trade through much of the session Friday, all but August lean hog futures closed higher. This raised expectations that further demand support may move back into the market next week but seemed to also cause traders to lose some of the bearish intent seen earlier in the week as they break for the weekend. Feeder cattle futures posted the most aggressive gains as underlying fundamental support helped to bring traders back to the table despite limited technical direction in the complex over the past couple of days. Hog futures rebounded from limit or near-limit losses Thursday, but there still seems to be growing uncertainty about the ability to regain previous pork cutout values. Hog prices closed lower on the National Direct Afternoon Hog Report in light-to-moderate trade, down $0.76 with a weighted average of $99.15 on 4,044 head. December corn is up 3 1/2 cents per bushel, and December soybean meal is up $0.40 per ton. The Dow Jones Industrial Average is up 131 points, and the NASDAQ is down 67 points.
LIVE CATTLE:
Live cattle futures bounced higher in late-day trade as early pressure eased. This did little to change the short-term market direction or raise expectations of additional market changes, but the market's ability to close on a high note for the week will continue to create momentum early next week. August live cattle closed $0.42 higher at $123, October live cattle closed $0.30 higher at $127.87 and December live cattle closed $0.55 higher at $133.33. Cash cattle trade appears to be done for the week with bids quiet the entire day Friday. The moderate trade seen Wednesday is not expected to create enough negotiated cattle for packers to remain comfortable with current procurement levels, but short-bought packer commitments is nothing new to the packing industry. It will be interesting to watch just how aggressive packers will be early next week, or if they will be able to hold out until the middle to end of next week before securing additional cattle on their books. Trade seen earlier in the week is expected to be mostly $197 to $198 dressed basis, which is steady to $1 per cwt higher than last week, while live cattle are $1 to $2 per cwt higher than last week, mostly at $121 per cwt. Even with the limited numbers, the ability to etch out higher weekly prices remains a positive move for the live cattle market, despite the current disparity between cash cattle and beef values.
Friday's slaughter is estimated at 113,000 head -- 1,000 head less than a week ago and 4,000 head more than a year ago. Week-to-date cattle slaughter is estimated at 593,000 head, which is 2,000 head above week-ago levels and 20,000 head above year-ago totals.
Boxed beef prices closed higher: choice up $3.68 ($296.26) and select up $3.32 ($277.09) with a movement of 93 loads (51.92 loads of choice, 16.67 loads of select, 7.81 loads of trim and 16.57 loads of ground beef).
MONDAY'S CASH CATTLE CALL: Steady. The lack of activity Friday in cash cattle markets indicates additional focus on securing more negotiated cash cattle trade next week. The renewed support in boxed beef values may help keep asking prices elevated, but active trade is not expected early in the week.
FEEDER CATTLE:
Limited activity was seen in feeder cattle futures most of the session Friday, but traders quickly reversed the downward shift seen Thursday, as triple-digit gains were recorded in nearly all contract months. Despite continued gains in corn prices, the focus moved back to the potential for stronger beef demand not only short term, but well into 2022. This could further support feeder cattle prices through the fall placement season due to supply tightness in most sectors. August feeders closed $2.20 higher at $159.85, September feeders closed $2.17 higher at $163.32 and October feeders closed $1.92 higher at $165.77. Cash buyers, as well as futures traders, are expected to closely monitor feeder cattle sales in the next couple of weeks to gain insight on not only the price direction heading into the fall run, but also the intensity of buyer demand over the coming months. The CME feeder cattle index 8/5/2021: up $0.75, $156.55.
LEAN HOGS:
Late-day buying slowly moved back into lean hog futures trade with the focus on renewed position support after Thursday's aggressive market adjustment. Unsettled movements remain in pork cutout prices, which could continue over the near future. Questions about how increasing COVID numbers will affect both domestic and export pork demand are adding concern to the complex. Even with the wide market swings through the week, prices continue to hover within a sideways trading range, established by market lows and highs set in June. This could allow for further market shifts through much of August, without testing technical levels in all nearby contracts. August lean hogs closed $0.72 lower at $108.75, October lean hogs closed $0.47 higher at $87.60, and December lean hogs closed $0.87 higher at $81.70. Pork prices inched higher, as increased overall product movement helped to add stability to the complex. Concerns remain about the ability to regain lost price values over the coming days as demand uncertainty remains a major question in the near future. Pork cutouts totaled 353.37 loads with 314.81 loads of pork cutouts and 38.55 loads of trim. Pork cutout values: up $0.55, $123.67. Even though primal cuts remained more stable at the end of the week than in previous days, loin cuts led the market higher with a $3.68-per-cwt gain, while belly prices fell $4.15 per cwt. Friday's slaughter is estimated at 455,000 head -- 31,000 head above a week ago and 21,000 head less than year ago. The CME lean hog index 8/5/2021: down $0.43, $112.05.
MONDAY'S CASH HOG CALL: Steady to $1 lower. The recent wide price swings in futures and pork cutout values are not likely to be fully worked through cash hog markets. This is expected to lead to steady to lower bids early next week, with the potential for renewed stability and possibly more active buyer support as the week continues.
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