GENERAL COMMENTS:
Tuesday morning trade in cattle futures remained limited, focusing on narrow to moderate losses as traders moved prices within a narrow but sideways trend. The last half of the trading session became more active with additional losses in grain and stock markets creating some uncertainty, which added more active selling pressure. October live cattle and lean hog futures posted $1 per cwt weakness, as did September feeder cattle futures. Even though spot markets led the market lower, there was little interest in posting aggressive pressure in deferred contracts. Hog prices closed higher on the National Direct Afternoon Hog Report in moderate trade, up $2.64 with a weighted average of $98.32 on 7,030 head. December corn is down 5 1/4 cent per bushel and December soybean meal is down $0.40 per ton. The Dow Jones Industrial Average is up 286 points and NASDAQ is down 138 points.
LIVE CATTLE:
Late day selling stepped back into the live cattle complex Tuesday afternoon. Although markets posted firm losses in nearby contracts, October and December contracts retracted Monday's gains, moving closing prices back to where markets opened Monday morning. Essentially erasing the last two days of trade activity is consistent with the back-and-forth activity seen in the market. Even though boxed beef prices continue to surge higher, the futures market seems to have very little interest in these moves as it may not have long-term implications to overall cattle price levels through the end of the year and well into 2022. August live cattle closed $0.22 lower at $123.30, October live cattle closed $1 lower at $128.12 and December live cattle closed $0.65 lower at $133.82. Cash cattle activity remains extremely quiet for a Tuesday. Just a few asking prices have developed at $124 per cwt in the South, but this gathered absolutely no interest as packers seem content to hold out until at least Wednesday. Given the cattle on feed release Friday, there is a chance that both sides are looking for the report to move markets in their direction and may be willing to hold out until after the report.
Tuesday's slaughter is estimated at 121,000 head, 4,000 more than a week ago and 2,000 head more than a year ago. Week to date totals are listed at 240,000 head, 10,000 more than week ago levels and 8,000 ahead year ago totals.
Boxed beef prices closed sharply higher once again: choice up $8.26 ($338.06) and select up $3.22 ($306.77) with a movement of 122 loads (56.19 loads of choice, 21.11 loads of select, 12.12 loads of trim and 32.19 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. Both sides appear to be focused on potential trade starting midweek, although the limited amount of interest shown early in the week could indicate that both sides may wait until after the cattle on feed report Friday.
FEEDER CATTLE:
Feeder cattle futures posted additional losses in late day trade as softness in live cattle futures offset lower corn and feed prices. The concern that additional market shifts will continue to keep prices from testing summer highs and keep markets within the sideways trend could limit additional buyers from moving back into the complex. Early estimates of Friday's cattle on feed report are pointing to July placements near year-ago levels. This could further support ideas of tighter supplies through the first half of 2022, but at this point traders are still unwilling to adjust prices before the report release. August feeders closed $0.62 lower at $156.57 September feeders closed $1.07 lower at $160.92 and October feeders closed $0.67 lower at $164.27. The CME Feeder Cattle Index for Aug. 16: down $0.65, $154.91.
LEAN HOGS:
The recent volatility in cash hog prices and pork values is adding even more concern to lean hog traders, which backed away from Monday's aggressive gains. October futures led the complex lower with prices hovering around $1 per cwt lower through most of the session. The underlying pressure in outside markets added to the nervousness in the hog market, although, at this point, it is unexpected that aggressive further liquidation will develop. With October futures still at a strong discount to cash hog prices, the focus on keeping prices within the current trading range could limit daily market moves through much of August. October lean hogs closed $1.10 lower at $87.90, December lean hogs closed $0.77 lower at $81.07, and February lean hog futures closed $0.35 lower at $83.60. Pork prices softened at the end of the day, quickly backing away from gains in the morning report. Pork cutouts totaled 406.95 loads with 372.73 loads of pork cutouts and 34.21 loads of trim. Pork cutout values: down $1.23, $118.12. Tuesday's slaughter is estimated at 478,000 head, 6,000 head above a week ago and 3,000 head below than year ago. The CME Lean Hog Index for Aug. 16: down $0.0, $109.64.
WEDNESDAY'S CASH HOG CALL: Steady to $1 Lower. The inability to bring active and stable support to futures prices and pork markets continues to create a discount in cash markets. This is expected to lead to additional softness in cash bids Wednesday morning.
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