GENERAL COMMENTS:
Triple-digit losses in October lean hog futures seem to be the major direction in livestock trade Tuesday morning. Hog traders are retracting aggressive gains seen Monday due to early week pressure in pork cut and cash hog prices. The volatility in wholesale beef and pork values continues, which is causing more disruption in the market as traders are unable and unwilling to follow the wide price swings as many are uncertain how long they will last. Cattle futures are mostly lower with losses of 12 to 40 cents hundredweight (cwt) in most contract months. This is allowing contracts to wander within a sideways trading range, limiting overall market direction. December corn is down 1 cent per bushel and December soybean meal is up $2.90 per ton. The Dow Jones Industrial Average is down 294 points.
LIVE CATTLE:
August live cattle bounced from narrow, early morning losses and are $0.30 higher at $123.82 at midday. October futures remain under light pressure, with very little movement developing the entire morning. October contracts are $0.35 lower at $128.77 cwt. The rest of the complex remains lightly traded with prices 12 to 45 cents lower at midday. Very little long-term direction is expected to develop over the next few days with traders still unable to shift cash cattle prices significantly higher, while boxed beef values continue to skyrocket higher with seemingly no end in sight. Even with these current concerns, October live cattle futures remain comfortable trading within the $7 per cwt trading range seen during the summer months. Currently October contracts are $1.18 cents off summer highs set in June. Cash cattle activity remains quiet with asking prices and bids undeveloped Tuesday morning. It is possible some light trade may develop Tuesday afternoon, but there is a much better chance initial trade will be delayed until sometime Wednesday. Over the previous two weeks, very limited trade started on Tuesday, then light to moderate trade Wednesday essentially set the tone for weekly prices with any late-week activity just trickling into the market. But packers should be slightly more aggressive given the lack of negotiated trade seen during August and their need to fill additional gaps in front of and through the Labor Day holiday weekend. The lack of support in cash values surrounding surging boxed beef prices is more than frustrating, but the potential that boxed beef values could quickly tumble out of orbit has packers keeping pocketbooks close to their chest.
Tuesday's morning's boxed beef prices are higher with choice cuts up $5.76 at $335.56 and selects up $2.43 at $305.98 on a total count of 53 loads. The continued aggressive support in boxed beef values continues to add support to prices, but traders remain uncertain how this relates to sustained support in the rest of the cattle markets. Volume was significantly higher in morning trade than in previous days, but still showing limited overall volume levels. Dow Jones estimated Tuesday's cattle slaughter at 121,000 -- 1,000 higher than a week ago.
FEEDER CATTLE:
Feeder cattle futures have trickled further lower following moderate weakness Monday and little to no significant encouragement from outside markets. The narrow losses have left buyers hovering on the sidelines. But there is not enough movement in any feeder cattle markets to create a significant change in position at this point. August futures are $0.12 cwt lower and September contracts are $0.35 cwt lower, trading at 161.60 cwt. The active, triple-digit losses in stock markets seem to be the main draw on most commodity prices Tuesday morning. September contacts remain the focus in the feeder cattle market and, although prices have backed away from recent highs, August lows of $161.15 cwt are being well defended to this point. Cash feeder cattle markets last week ended mixed. Strong demand for yearling steers and heifers remains, although prices were listed generally $3 lower to $1 cwt higher on a national level. There was smaller than usual volume at several sales. The continued dry areas in many parts of the Midwest and western sections of the country continue to add uncertainty about overall timing of feeder cattle moving off grass and heading to town. Feed prices continue to be a concern for buyers, although the expected tighter supplies over the next year should help keep buyers aggressive even with higher production costs. The CME Feeder Index was priced at $155.54 for Aug. 13.
LEAN HOGS:
October lean hog futures are leading the hog complex lower Tuesday morning with $1.07 cwt losses, trading at $88.37 cwt at midmorning. Traders quickly backed away from Monday's aggressive gains following a pullback in pork values and cash prices in the afternoon reports Monday. The continued, volatile back-and-forth shifts in pork cutout values and cash prices over the last couple of weeks are creating very little long-term confidence in market direction. Although all nearby contracts are lower Tuesday morning, losses are tempered significantly from spot October pressure with most early 2022 contracts 20 to 40 cents lower during morning activity. Traders are looking for additional direction in cash values, but even more so, reports of pork demand support in domestic and export markets are needed to rebuild trader confidence at this point. Pork primal cuts remain volatile with aggressive gains in both hams and bellies. At this point, traders are discounting these price swings based on the limited number and yo-yo effect pork prices have had over the last several days. Belly cuts are reported $38 cwt higher for the morning. These type of market swings are not believable to most trade observers. Cutouts were up $8.46 at $127.81 Tuesday morning on 225.90 loads. Negotiated hog prices are $0.38 cwt lower with a weighted average price of $95.28 cwt on 4,020 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $106.92 cwt. Dow Jones estimated Tuesday's hog slaughter at 472,000 -- 6,000 above a week ago. The CME Lean Hog Index is estimated at $109.64 for Aug. 16.
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