GENERAL COMMENTS:
Livestock trade has broken away from the wild (triple-digit) price swings seen over the past couple of days, posting limited market shifts Tuesday morning. Narrow to moderate gains are still developing in nearby live cattle and feeder cattle futures; these gains are still able to notch new contract highs in most nearby months. Hog futures have posted uniform losses as traders remain concerned following Monday's aggressive pressure in pork values and cash hog prices. The underlying softness in the market is likely to limit short-term support but is still expected to hold the sideways pattern seen over the last couple of weeks. December corn is up 7 3/4 cents per bushel and December soybean meal is up $7 per ton. The Dow Jones Industrial Average is up 45 points.
LIVE CATTLE
Firm follow-through support is seen in all live cattle futures with the bulk in December and February contracts. Underlying support continues through the entire market following aggressive triple-digit gains Monday. The focus on live cattle futures continues to be based on lower-than-expected cattle on feed numbers, but the drop in placement levels in July is finally sparking some interest in 1st and 2nd quarter 2022 contracts with February and April futures trading above $140 per hundredweight (cwt). The firmness in boxed beef values continues to keep traders interested, although many still fear an aggressive beef market pullback once Labor Day buying has finished. Cash cattle activity remains generally quiet with bids yet to be well established in all areas of cattle country. A few asking prices are starting to surface with cattle priced at $125 and higher live basis in the South and $202 and higher dressed in the North. Although there may be some limited trades trickling into the market over the next two days, it is expected most trade will be pushed into Thursday with feeders likely to hold out for higher money given the underlying support in beef values and futures trade.
Tuesday morning's boxed beef prices are steady to lower in light trade, with choice cuts steady at $348.03 and selects down $1.57 at $317.83 on a total count of 69 loads. Following consistently sharp gains over the last two weeks, this shift lower is creating some uncertainty in the market. But with current price levels, moderate corrections are expected. Dow Jones estimated Tuesday's cattle slaughter at 121,000, steady with a week ago.
FEEDER CATTLE:
Early gains in feeder cattle futures brought follow-through buyer support after Monday's aggressive triple-digit gains. Although the underlying tone in the market remains firm, midday buyer support has slowed, allowing traders to adjust positions. This has pulled back from early gains with prices mixed to moderately lower. The strong rally in grain trade is starting to have an impact on feeder cattle futures buying, especially in deferred months. Even with the narrow market pullback seen at midday, the feeder cattle futures remain at or near contract highs set Monday, with very little expectations of aggressive losses to develop in the near term. But some traders do feel the aggressive two-day rally surrounding the Cattle on Feed report was overly aggressive and these current moves may be bringing a sense of longer-term reality to the complex. Feeder cattle sold at the Oklahoma City sale were mixed in moderate to good demand. Overall average steers sold for $4 to $7 per cwt lower, while feeder heifers brought $3 to $6 per cwt higher than the previous week. Demand is expected to remain firm, although upcoming cash sales support will likely be heavily impacted by the aggressive support in futures trade, which could fuel higher prices over the upcoming days. The CME Feeder Index was priced at $155.73 for Aug. 20.
LEAN HOGS:
Firm pressure is seen in lean hog futures following early week softness in pork cuts and cash hog values. The majority of market weakness is in February through June contracts, as traders remain focused on the direction of long-term pork demand. A combination of domestic and export market demand for pork will continue to play a significant role in the ability to drive prices higher through early 2022. Lean hog futures remain extremely comfortable within the current market range and could continue to shift higher and lower within this price gap over the upcoming days and weeks. Pork primals are mixed once again, although the wide price shifts could create additional volatility through the week. Cutouts are up $0.32 at $113.58 Tuesday morning on 236.37 loads. Negotiated hog prices are 0.81 lower per cwt lower with a weighted average price of $91.66 per cwt on 2,907 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $103.81 per cwt. Dow Jones estimated Tuesday's hog slaughter at 477,000 -- 1,000 below a week ago, while 6,000 less than year ago levels. The CME Lean Hog Index is estimated at $107.90 for Aug. 20.
No comments:
Post a Comment