GENERAL COMMENTS:
Active losses quickly developed in all livestock futures, although the moves in cattle and hog markets were more focused on outside pressure than any technical or fundamental changes developing during the week. Livestock futures have also been caught up in a daily up and down cycle, which is making it even harder to string two consecutive positive trading sessions together. Nearby live cattle and feeder cattle contracts have not posted two consecutive days of gains since early August, adding to the concern that prices may continue to chop in a sideways pattern over the near future. The focus on Friday's cattle on feed report will likely divert most of the attention away from most other factors early Friday -- at least in live cattle and feeder cattle trade. Hog prices closed higher on the National Direct Afternoon Hog Report in moderate trade, up $1.29 with a weighted average of $98.80 on 8,215 head. December corn is down 14 1/4 cent per bushel and December soybean meal is down $6.70 per ton. The Dow Jones Industrial Average is down 65 points (after cutting earlier losses in half) and NASDAQ is up 15 points.
LIVE CATTLE:
Live cattle quickly backed away from previous gains Thursday morning as active pressure developed not only in cattle trade, but most commodity and financial markets. Triple-digit losses in corn trade, based on potential wetter weather in dry areas of the West, sparked widespread commodity market losses. At this point, cattle fundamentals, which focus partially on production and feed costs, were not in the driver's seat, allowing prices to shift lower on widespread selling. The lack of consistent "one-way" market moves over the past couple of weeks is also playing into the back-and-forth market shifts, which has caused October live cattle futures to move in opposite directions every other trading session since early August. Traders are going to be closely focused on Friday's cattle on feed reports, which will likely lead to additional pre-report positioning through much of the morning trade. August live cattle closed $0.62 lower at $123.40, October live cattle closed $0.90 lower at $128.15 and December live cattle closed $0.60 lower at $133.97. Cash cattle interest started to become more evident, especially in the South, Thursday. Light trade is reported at $122 per cwt live basis. This is generally $1 per cwt higher than last week's weighted average. Trade midweek in the North developed in a wide range from $197 to $205 per cwt. Most trade was reported at $200 per cwt. This is $2 per cwt higher than most reported trade last week, but generally steady with Nebraska's weighted basis average. Asking prices on cattle still on showlists remain at $123 to $124 in the South and $202 and higher in the North. It is likely that additional trade will still develop sometime Friday, but given the quiet end-of-week activity over the past two weeks, nothing can be assumed. With the cattle on feed report released at 2 p.m. Central time, the expectation is that both sides will be closely monitoring the report, with the potential of some trade seen after the report if any significant surprises arise with report numbers.
Thursday's slaughter is estimated at 119,000 head, 3,000 more than a week ago and 1,000 head less than a year ago. Week to date totals are listed at 479,000 head, 17,000 more than week ago levels and 9,000 ahead year ago totals.
Boxed beef prices closed higher: choice up $1.55 ($341.63) and select up $6.61 ($316.41) with a movement of 75 loads (35.84 loads of choice, 15.92 loads of select, 13.69 loads of trim and 9.36 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady with midweek trade. It is likely that additional trade could develop Friday, but without a significant shift in futures trade or surprises on Friday afternoon's cattle on feed report, it is likely that remaining trade may fall in line with trade already seen this week.
FEEDER CATTLE:
Feeder cattle futures shifted lower but were unable to erase the bulk of market gains seen Wednesday. This could allow for underlying support to hold through the feeder cattle complex as traders look for increased market movement ahead of and after the cattle on feed report Friday. Feeder cattle placement levels are expected to see the largest percentage change from year ago levels, with analyst averages expecting 93.2% placed in July. This is a significant drop from July 2020 levels, but it is important to remember that 2020 placements (as well as anything else in the cattle market) was not typical. This could cause some traders to overlook 2020 data, and revert to 2019 placement levels, which may be a better long-term comparison to the market once all the dust settles. August feeders closed $0.57 lower at $158.27 September feeders closed $0.40 lower at $162.90 and October feeders closed $0.35 lower at $165.47. The CME Feeder Cattle Index for Aug. 18: up $0.18, $155.42.
LEAN HOGS:
Lean hog futures posted the most aggressive losses of all livestock trade Thursday as traders quickly backed away from midweek gains. October futures led the move lower with $2 per cwt losses seen in the spot month contracts and created uncertainty through the complex. After posting a two-week high Wednesday, the concern that aggressive outside market pressure and cooling support in pork and cash hog markets may limit further support in the near future. Even with the triple-digit losses seen in all nearby contracts, prices remain entrenched within a sideways market trend, which could limit market short-term technical shifts. October lean hogs closed $2.17 lower at $86.92, December lean hogs closed $1.57 lower at $80.55, and February lean hog futures closed $1.25 lower at $83.22. Pork prices moved higher once again, but in a much more controlled fashion than has been seen over the last couple of weeks. Pork cutouts totaled 283.19 loads with 257.52 loads of pork cutouts and 25.68 loads of trim. Pork cutout values: up $0.79, $121.40. Thursday's slaughter is estimated at 478,000 head, 13,000 head above a week ago and unchanged from a year ago. Estimated week to date slaughter totals are reported at 1.90 million head. 38,000 above week ago levels, but 16,000 head less than year ago totals. The CME Lean Hog Index for Aug. 18: down $0.99, $108.18.
FRIDAY'S CASH HOG CALL: Steady. Sharp moves seen through the last couple weeks in lean hog futures, combined with wide gyrations in cash hog and pork cutout values, will create uncertainty for cash bids Friday morning. The ability to gain access to needed hogs for weekend runs will be the focus of packers, as processing schedules are starting to get back into a steady routine, only to be disrupted within two weeks due to Labor Day weekend.
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