GENERAL COMMENTS:
Triple-digit losses are seen in cattle and hog futures Tuesday morning as traders are focusing on the pressure in other commodity markets, as well as growing concerns that meat prices may continue to move lower heading into the holiday weekend. Lightly traded August live cattle futures are the only contract holding gains at midday. But, traders are squarely focused on the direction of October futures and backing away from previous support. Sluggish trade is expected through most of the week, which may continue to add to price volatility over the coming days. December corn is down 13 cents per bushel and December soybean meal is down $1.20 per ton. The Dow Jones Industrial Average is up 30 points.
LIVE CATTLE:
Nearby live cattle futures remain extremely weak with triple-digit losses sweeping across the market Tuesday. Wide market swings in August futures are nothing more than an indication of the extremely light trade in the soon-to-expire spot-contract month. October futures remain the contract to watch, but early morning losses allowed prices to trade $1.22 per cwt lower at midday, moving to $127.12 per cwt. The move below $128 per cwt created technical pressure in nearby live cattle trade, creating concerns that additional follow-through pressure may develop during the week, especially if active losses continue in grain trade. The double-digit losses in corn prices are being closely watched as live cattle traders are not willing to aggressively move in the opposite direction as other commodity markets, especially given the developing softness in beef values. Cash cattle activity remains generally quiet with bids still hard to pin down. Asking prices are starting to be seen in the North at $125 and higher per cwt, but most activity is likely to be pushed off until at least Wednesday given the weakness in futures trade. Although both sides would like to finish needed business before Friday, most activity will likely be targeted for some time Wednesday or Thursday.
Tuesday morning's boxed beef prices are higher in light trade, with choice cuts $0.36 higher at $343.14 and selects up $2.06 at $314.61 on a total count of 59 loads. Dow Jones estimated Tuesday's cattle slaughter at 120,000 -- up 1,000 from a week ago, but steady with year ago levels.
FEEDER CATTLE:
The gains seen early in the week associated with lower feed and corn prices were not enough to create market support Tuesday morning. October and November futures are holding triple-digit losses following active pressure in most commodities, including live cattle and corn futures. October futures still remain in the top third of recent trading ranges, as traders are slowly but steadily backing away from contract highs set last week. End-of-month market pressure may continue to add further weakness to the complex as trade volume remains generally sluggish. The CME Feeder Index was priced at $159.56 for Aug. 27.
LEAN HOGS:
Active pressure in lean hog futures developed Tuesday despite just moderate losses Monday. October futures have continued to lead the complex lower, with futures moving below $89 per cwt and holding a $1.30 per cwt loss at midday. This shift lower is creating limited but noticeable pressure through the entire complex, with other nearby contracts trading 30 to 90 cents lower. Given the choppy market moves over the last month, prices remain well within a wide sideways market trend, but spot month contract have moved over $2 per cwt below recent market highs, creating uncertainty about further buying support in early September. October contacts still hold a $7 per cwt premium over December contracts, creating concern that uncertain pork demand at the end of the year combined with current production levels may keep nearby prices relatively soft. Cutouts are up $2.43 at $112.15 Tuesday morning on 227.14 loads. Negotiated hog prices are 1.21 higher per cwt lower with a weighted average price of $91.48 per cwt on 5,180 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $99.95 per cwt. Dow Jones estimated Tuesday's hog slaughter at 476,000 -- 4,000 lower than a week ago, while 1,000 less than year ago levels. The CME Lean Hog Index is estimated at $103.72 for Aug. 30.
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