GENERAL COMMENTS:
Market weakness developed in all livestock futures in late day trade Thursday. A combination of active pressure in financial markets and lack of follow-through buyer support in nearby cattle and hog trade left markets generally unsupported Thursday afternoon. Hog futures were the lower Thursday as firm pressure developed through the complex. Hog prices moved lower on the National Direct Afternoon Hog Report in moderate trade, fell $1.21 with a weighted average of $92.98 on 4,770 head. December corn is down 1 cent per bushel and December soybean meal is up $3.10 per ton. The Dow Jones Industrial Average is down 191 points and NASDAQ is down 96 points.
LIVE CATTLE:
August live cattle futures led the cattle market lower in late day pressure Thursday. This created some additional uncertainty as markets have started to slide lower over the past three days. After setting contract highs in most contracts early in the week, the pullback in prices is somewhat expected but still discouraging. October through February futures posted firm losses, but the potential to keep prices in the top end of the trading range is likely to minimize active further pressure. Cash cattle trade has started to develop in all areas Thursday afternoon. Trade in the South is seen mostly $123 per cwt, which is generally $1 per cwt higher than last week. Trade in the North has been reported at $202 dressed basis and $125 per cwt live basis. This is also generally $1 per cwt higher than last week. Cattle still on showlists are being priced at $125 live and $205 and higher dressed. It is likely that some additional trade will develop before the end of the week, but the biggest question is if prices are essentially set or if late holdouts by feeders will be able to convince packers to dig deeper into their pockets before the weekend break. The special Fed Cattle Exchange Auction Thursday listed a total of 3,731 head, of which 1,387 actually sold and 2,344 head were listed as unsold, as they did not meet the reserve prices that ranged from $122 to $127. Opening prices ranged from $119 to $122, high bids ranged from $122 to $123. The state-by-state breakdown looks like this: Texas 3,470 total head, with 1,387 head sold at $122 to $123 and 2,083 went head unsold; Kansas 72 total head, all of which went unsold; Oklahoma 189 total head, all of which went unsold.
Thursday's slaughter is estimated at 114,000 head, 5,000 less than a week ago and 6,000 head less than a year ago. Week to date totals are listed at 463,000 head, 16,000 less than week ago levels and 9,000 below year ago totals.
Boxed beef prices closed lower: choice down $0.69 ($346.89) and select down $1.21 ($315.69) with a movement of 106 loads (48.58 loads of choice, 27.06 loads of select, 20.77 loads of trim and 9.98 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady to $2 higher. The moderate bounce higher in cash cattle trade from last week Thursday afternoon is starting to spark expectations if further gains can develop Friday.
FEEDER CATTLE:
Despite being able to hold prices generally steady through most of the morning, further pressure developed across the feeder cattle complex. October contacts posted the most aggressive losses of nearby contracts, pulling further away from recent highs as traders steadily back away from the optimism seen after last week's cattle on feed report. Although tight supplies are still expected to be seen through much of the next year, the concern of overall feed prices and beef demand is curbing earlier gains. This could allow for prices to see additional pressure through the end of the month, but a steady to firming market trend is likely to still hold in most contacts. August feeders closed $0.15 higher at $159.45 September feeders closed $0.70 lower at $164.45 and October feeders closed $1.00 lower at $168.27. The CME Feeder Cattle Index for Aug. 25: $158.79, up 0.72.
LEAN HOGS:
Sharp losses developed in lean hog futures Thursday morning as early mixed trade left some feeling that follow-through gains would develop. Most of the pressure developed in afternoon trade as traders seem to be focused on the wide market swings in pork cutout trade after the morning report. The softness in all nearby contracts continues to focus on keeping prices within the confines of a sideways trend, with recent market swings likely to develop across the complex. October lean hogs closed $0.85 lower at $87.90, December lean hogs closed $10.55 lower at $81.40, and February lean hog futures closed $0.47 lower at $83.22. Pork prices surged higher Thursday. Pork cutouts totaled 251.20 loads with 219.19 loads of pork cutouts and 31.01 loads of trim. Pork cutout values: up $6.16, $116.40. Thursday's slaughter is estimated at 474,000 head, 2,000 head above a week ago and down 9,000 from a year ago. Week to date slaughter is estimated at 1.64 million. The CME Lean Hog Index for Aug. 25: down $1.56, $106.34.
FRIDAY'S CASH HOG CALL: Steady. The wild swings back and forth in cash hog prices during the week has created some uncertainty as to further direction in hog prices. Packers continue to focus on active procurement levels, while sellers try to take advantage of the higher future trade.
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