GENERAL COMMENTS:
Interest was slow to develop in livestock futures early Monday morning. The bearish moves in grain markets created some shifts in overall production costs, which has helped create underlying support in feeder cattle and lean hog futures. But, overall, the tone of the market remains generally unchanged as traders adjust price levels. The combination of last week's market shifts and traders preparing for the upcoming holiday weekend is likely to keep markets mixed through the entire session. December corn is down 10 cents per bushel and December soybean meal is down $2.00 per ton. The Dow Jones Industrial Average is up 18 points.
LIVE CATTLE:
Live cattle futures are mixed in a moderate to wide range at midday with lightly traded August futures holding at $122.72 per cwt following a 72-cent gain. Other nearby contracts are trading 27 to 70 cents lower with limited underlying support after the grain markets tumbled during Monday trade. This could add some additional softness in the complex, although prices are not likely to show aggressive sharp losses given the fundamental support in the market. Cash cattle markets remain quiet with bids and asking prices undeveloped at this point. It is likely trade may trickle in through the week as both sides would rather finish any needed business before Friday and the long holiday weekend. It is uncertain just how active packers will be for short-term needs. Packers have been slowly acquiring cattle for delayed delivery over the past month, which is also creating some concern that there may not be too many open slots for next week deliveries. This will likely also shift the emphasis back and forth between negotiated and formula trade activity in the coming weeks, possibly limiting further upside market movement surrounding the Labor Day holiday.
Monday morning's boxed beef prices are lower in light trade, with choice cuts $2.63 lower at $342.71 and selects down $2.39 at $313.13 on a total count of 51 loads. Dow Jones estimated Monday's cattle slaughter is 119,000 -- up 1,000 from a week ago, but steady with year ago levels.
FEEDER CATTLE:
The moderate price shifts in live cattle futures Monday morning was not enough to create any significant interest in feeder cattle futures. September contracts remain generally steady with limited volume; narrow to moderate (22 to 40 cent) gains in other nearby contracts are focused more on the aggressive pullback in early week corn trade and how this could further impact overall production costs. With December corn futures trading a dime lower at midday, the lack of active support in the feeder cattle futures may indicate buyer support may be even more limited than previously thought. Overall, trade is likely to remain subdued through the week with the holiday weekend likely to keep some traders out of the market until well into September. Early reports of Joplin Regional Stockyards' feeder cattle prices are steady to $3 per cwt higher. This could add some underlying support in other sales through the week. The CME Feeder Index was priced at $159.39 for Aug. 26.
LEAN HOGS:
Following the aggressive market rally at the end of last week, lean hog futures seem to have little incentive to move significantly in either direction. Although October futures are starting to give back a piece of the hard-fought gains of last week, with prices $0.65 per cwt lower, the rest of the complex is stuck within a very narrow range from 20 cents lower to 25 cents higher. If prices remain within the current level, traders will likely remain mostly out of the market with the focus on upcoming moves in cash hog and pork cuts. With the end of August quickly approaching, it is possible that trade will remain quiet until early September. Some traders may even be exiting the market ahead of the holiday weekend, further limiting market direction. Active support in pork cutout levels developed Monday morning. The limited trade volume may create additional price shifts on the afternoon report, but belly cuts are reported $54 per cwt higher, which is skewing price levels across the entire complex. Cutouts are up $6.86 at $123.45 Monday morning on 143.74 loads. Negotiated hog prices are 1.82 lower per cwt lower with a weighted average price of $90.27 per cwt on 4,605 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $102.36 per cwt. Dow Jones estimated Monday's hog slaughter at 473,000 -- 4,000 lower than a week ago, while 1,000 less than year ago levels. The CME Lean Hog Index is estimated at $103.49 for Aug. 27.
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