GENERAL COMMENTS:
Livestock markets remain mixed in light to moderate trade Monday morning. Firm losses in feeder cattle futures continue to focus on previous grain market support following last week's crop reports. Hog futures are showing firm underlying support with October contracts taking over as spot month, but still trading at a significant discount from where August futures settled Friday. Traders will continue to closely follow the direction of wholesale beef and pork values, but these price shifts are already being discounted by traders in the cash and futures markets. December corn is down 2 cent per bushel and December soybean meal is down $0.70 per ton. The Dow Jones Industrial Average is down 70 points.
LIVE CATTLE:
October live cattle futures are trading $0.45 higher at $128.57 at midday. Mixed trade was seen through Monday morning as initial early support has been unable to gain traction, especially in deferred contract months. Traders are looking for increased underlying moves in outside markets and beef values. The narrow-to-moderate gains in August through December contracts still focus on prices hovering in a sideways market trend, with little indication of breaking out of this pattern soon. Even though early 2022 contracts are showing moderate losses of 35 to 60 cents hundredweight (cwt), these price shifts are not enough to create technical market changes at this point. This will potentially allow traders to continue to focus on fundamental factors, but shift prices within narrow-to-moderate ranges over the coming days. Cash cattle interest remains quiet Monday, with bids and asking prices undeveloped. Given that last week's trade mirrored the previous week and limited overall cattle were traded on the negotiated markets, the focus will be on packer interest over the next couple of days. It is likely that moderate trade will still be delayed until midweek, but asking prices are not expected to fall from previous week's levels as feeders remain confident about the ability to move cattle at steady-to-higher price levels. New showlists appear to be mixed, higher in Kansas and Nebraska/Colorado; somewhat smaller in Texas. The discrepancy between moves in boxed beef values and cash markets continue to be obvious, but it is unlikely this gap will quickly close given packer access to cattle and uncertainty of long-term moves in beef values.
Monday morning's boxed beef prices are higher with choice cuts up $2.59 at $327.42 and selects up $3.13 at $301.15. Limited trade continues in boxed beef with 35 total loads reported Monday morning. Although prices continue to surge higher, the lack of active trade in the negotiated boxed beef trade seems to be creating concerns that a true picture is not being seen when just focusing on choice and select cut prices. Dow Jones estimated Monday's cattle slaughter at 118,000 -- 1,000 less than a week ago.
FEEDER CATTLE:
Feeder cattle futures are under light pressure. August futures are 97 cents per cwt lower and September contracts are $1.05 per cwt lower with September futures trading at $162.02 per cwt. The narrow losses in grain trade Monday morning did very little to bring support to the entire feeder cattle complex as traders are still trying to adjust to the bullish grain market reports seen last week. This has the potential to create additional softness in feeder cattle futures, especially given limited support in live cattle trade during mid-August. Cash feeder cattle prices will be closely monitored over the next couple of days as various weekly sales are reported. This could help bring further market clarity to the complex. Even though demand is expected to be moderate to strong through the week, the price shifts on feeder cattle could be variable, depending on location and size of cattle sold. The CME Feeder Index was priced at $155.83 for Aug. 12.
LEAN HOGS:
October lean hog futures rallied higher on their first trading session as spot month contract, adding $1.85 per cwt with prices at $88.37 cwt at midmorning. Triple-digit gains are seen in remaining 2021 contract months, although prices still remain well within the market gap over the last month. With August contracts expiring well over $100 per cwt, there is concern that further cash market pressure may develop as all nearby contracts are hovering between $81 and $88 cwt. Limited pressure in grain trade and continued stability in pork processor levels heading into the week are helping spark current market optimism; but it is uncertain just how much follow-through buying this trade activity will be able to sustain. Pork primal cuts continue to remain extremely volatile this week, following the wide market swings of early August. Ham cuts led the market lower with a $12 cwt loss, while rib prices bounced $9 cwt higher in the morning report. Cutouts were down $3.12 at $122.56 Thursday morning on 156.81 loads. Negotiated hog prices are $2.15 per cwt lower with a weighted average price of $95.66 cwt on 3,745 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $109.46 cwt. Dow Jones estimated Monday's hog slaughter at 72,000 -- 13,000 above a week ago. The CME Lean Hog Index is estimated at $109.67 for Aug. 13.
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