GENERAL COMMENTS:
Triple-digit gains in lean hog futures seemed to help draw underlying support to both hog and live cattle trade late Monday. Live cattle futures posted a $1 per cwt rally in October contracts following another round of aggressive gains in boxed beef prices in the morning report. Losses developed in both deferred live cattle trade and all nearby feeder cattle trade, with traders still concerned about the ability to sustain strong boxed beef values through the next couple of months, and how any shift lower in meat prices will impact cattle market direction. Hog prices closed lower on the National Direct Afternoon Hog Report in light trade, down $2.29 with a weighted average of $95.68 on 4,305 head. December corn is down 4 1/4 cent per bushel and December soybean meal is up $2 per ton. The Dow Jones Industrial Average is up 56 points and NASDAQ is down 44 points.
LIVE CATTLE:
Firm underlying support slowly but steadily moved into nearby live cattle futures Monday afternoon following a sluggish and quiet start for the week. Continued strong support in morning boxed beef prices helped spark additional late day trade interest, although, at this point, most traders remain cautious of higher boxed beef values and the inability for cash trade to follow the upward trend. This may help spark further gains through the week, but the current sideways market trend may keep prices chopping back and forth within the current range. August live cattle closed $0.77 higher at $123.52, October live cattle closed $1 higher at $129.12 and December live cattle closed $0.65 higher at $134.47. Cash cattle markets remain quiet Monday, with asking prices and bids still undeveloped. The Five-Area weekly average price last week is listed at $123.28 per cwt. This is $0.55 per cwt lower than the previous week. Increased packer is expected to slowly develop through the week, although it may be midweek or later before significant interest is seen.
Monday's slaughter is estimated at 119,000 head, 6,000 more than a week ago and 6,000 head more than a year ago. Revised Friday cattle slaughter moved to 116,000 head, moving last week's total slaughter, including Saturday runs at 636,000 head.
Boxed beef prices closed sharply higher once again: choice up $4.97 ($329.80) and select up $5.53 ($303.55) with a movement of 78 loads (43.72 loads of choice, 15.51 loads of select, 8.70 loads of trim and 10.44 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Steady. Limited activity from both sides Monday is not unexpected and this is expected to limit early movement Tuesday, as trade may be pushed into midweek or later, and active bids and asking prices may not develop until well into Tuesday.
FEEDER CATTLE:
Firm pressure developed in nearby and deferred feeder cattle futures with August futures holding an 85-cent loss, while September futures led the market lower, trading over $1 per cwt lower at closing bell. Despite the recent market pullback in feeder cattle futures, nearby contracts are holding within the top third of recent market trends, thanks to the summer support seen across the feeder cattle market. This could help limit further market pressure during the upcoming months as increased cattle move into feedlots during seasonal sales. August feeders closed $0.85 lower at $157.20 September feeders closed $1.07 lower at $162.00 and October feeders closed $0.82 lower at $164.95. The CME Feeder Cattle Index for Aug. 13: down $0.29, $155.54.
LEAN HOGS:
October lean hog futures surged higher after moving to spot month contracts for the first time Monday. The significant gap between current October contract prices and where August futures settled is leaving opportunities for traders to step back into the market and move futures prices closer to current cash market prices. This could draw further market support through the next few trading sessions with October futures still $6 per cwt under the current cash hog price. October lean hogs closed $2.47 higher at $89.00, December lean hogs closed $1.67 higher at $81.85, and February lean hog futures closed $0.97 higher at $83.95. Pork prices tumbled lower with ham cuts falling $25.94 per cwt. The aggressive losses in ham markets offset moderate support in other primal cuts. Pork cutouts totaled 317.03 loads with 287.15 loads of pork cutouts and 29.88 loads of trim. Pork cutout values: down $6.33, $119.35. Monday's slaughter is estimated at 477,000 head, 21,000 head above a week ago and 8,000 head below than year ago. Revised Friday slaughter moved to 463,000 head, moving the weekly total, including Saturday's procurement to 2.4 million head. The CME Lean Hog Index for Aug. 13: down $0.23, $109.67.
TUESDAY'S CASH HOG CALL: Steady to $1 Lower. Packer schedules appear to be getting back to a more balanced routine, which may limit overall day to day volatility through the upcoming week. Given the recent shifts in cash and pork values, it is likely that most bids will remain steady to weaker, although the trend toward market stability seems to be the major consensus through the market.
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