GENERAL COMMENTS:
Early buyer support q ran out of gas in the last hour of trade Tuesday with nearby live cattle futures holding light to moderate losses, while most feeder cattle futures retracted a significant portion of Monday's gains. Higher grain prices were increasingly obvious, but traders also took a deeper look at price shifts, as the emotion from Friday's cattle on feed report has finally caused traders to remain more objective. Hog futures led the complex lower with triple-digit price reductions seen in February through October 2022 contract months. The concern of further pressure in pork values led to the weaker market shift. Hog prices surged higher on the National Direct Afternoon Hog Report in moderate trade, up $4.14 with a weighted average of $96.82 on 6,677 head. December corn is up 9 3/4 cents per bushel and December soybean meal is up $8 per ton. The Dow Jones Industrial Average is up 30 points and NASDAQ is up 77 points.
LIVE CATTLE:
Live cattle futures closed mixed in light to moderate late day trade Tuesday. The concern that higher feed prices are starting to redevelop, combined with nearby traders questioning the previous aggressive market rally led to August and October futures slipping lower in the last hour of trade. December through August 2022 contracts still held moderate gains with traders focusing on the tightening beef supply situation, which is likely to be seen over the next year or longer. December contracts continued to post new contract highs, as traders have added over $4 per cwt to the contract price over the last three trading sessions. August live cattle closed $0.65 lower at $125.80, October live cattle closed $0.25 lower at $131.70 and December live cattle closed $0.57 higher at $137.40. Cash cattle trade remains quiet with bids undeveloped through Tuesday afternoon. This is not unusual, but some packer inquiry should start to be seen sometime Wednesday. Feeders have floated asking prices of $125 and higher live basis in the South and $202 and higher in the North on a dressed basis. The recent support in futures trade is giving the expectation that feeders will be very disappointed with anything less than moderate weekly cash market gains. The bulk of business may still be pushed off until Thursday or Friday.
Tuesday's slaughter is estimated at 120,000 head, 1,000 more than a week ago and 1,000 head more than a year ago. Week to date totals are listed at 236,000 head, 14,000 less than week ago levels and 1,000 ahead year ago totals.
Boxed beef prices closed lower: choice down $0.45 ($347.58) and select down $2.50 ($316.90) 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).
WEDNESDAY'S CASH CATTLE CALL: Steady to $2 higher. Cash cattle interest remains quiet heading into midweek, but the combination of still strong beef values and the surge in futures prices will likely keep feeders aggressively pricing cattle through the entire week. Most trade is likely to develop either late Thursday or early Friday.
FEEDER CATTLE:
Late day price weakness trickled into cattle trade, led by a strong push in September feeder cattle futures. Although October contracts, which led the market higher Monday, are still able to hold most of the previous gains. September contracts gave back nearly all of Monday's triple-digit rally. The surge in grain prices is one of the reasons for increased underlying support through the entire complex as all but August futures closed lower despite holding moderate support early in the session. August feeders closed $0.37 higher at $158.57 September feeders closed $1.52 lower at $165.77 and October feeders closed $0.45 lower at $170.22. Cash feeder cattle prices remain mixed when compared to week ago price levels. The weekly national feeder cattle summary posted prices in a choppy pattern, generally $1 lower to $2 per cwt lower. Overall demand for cattle, especially lighter weight cattle, remains strong. But drought conditions in many areas have seen cattle forced off grass a good two to three months earlier than in other years. This increase in overall supply is one of the main reasons pressuring price levels. The CME Feeder Cattle Index for Aug. 20: unavailable due to submission delays.
LEAN HOGS:
Firm follow-through pressure quickly developed in lean hog futures trade Tuesday morning. The early week softness in pork and cash hog values, combined with reduced early week packer activity, has created concerns that the market may remain hard pressed to keep current in the near term. This has pushed December contracts below $81 per cwt once again, although this is still nearly $3 per cwt above August lows. The potential for lean hog futures to bounce around within a moderate trading range, but still unable to break out of recent price patterns, could leave mixed signals over the coming weeks. The most aggressive pressure developed in 2022 contracts, causing some underlying concern about the ability to maintain and strengthen overall pork demand through the upcoming year. October lean hogs closed $0.50 lower at $86.97, December lean hogs closed $0.62 lower at $80.77, and February lean hog futures closed $1.15 lower at $82.92. Pork prices slid lower led by belly cuts, which fell $14.88 per cwt Tuesday. Pork cutouts totaled 397.20 loads with 358.19 loads of pork cutouts and 39.01 loads of trim. Pork cutout values: down $2.25, $111.01. Tuesday'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 911,000 which is 38,000 below week ago levels, while 42,000 less than year ago totals. The CME Lean Hog Index for Aug. 23: unavailable due to packer submission issues.
WEDNESDAY'S CASH HOG CALL: Steady to $1 lower. Early week weakness in Monday mornings cash hog and pork cutout report could add further softness to packer bids Tuesday. Although there is not expected to be aggressive market shifts in either procurement levels or changes in short-term supplies, packers may be able to minimize spending during the first half of the week.
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