GENERAL COMMENTS:
Feeder cattle futures rallied higher late Wednesday with active triple-digit gains seen in all contracts, while nearby futures posted gains over $2 per cwt at the closing bell. The focus on tighter expected feeder cattle supplies, as traders are now able to trade cattle on feed report estimates, has created renewed market momentum. Lean hog futures posted firm nearby gains as traders focus on the potential for further support in cash values in the upcoming days. Even with 50- to 90-cent gains, live cattle futures seemed to get the least amount of market momentum, although these market shifts could bring further support over the coming days. Hog prices closed lower on the National Direct Afternoon Hog Report in light trade, down $0.81 with a weighted average of $97.51 on 5,602 head. December corn is up 1 1/2 cent per bushel and December soybean meal is down $2.50 per ton. The Dow Jones Industrial Average is down 382 points and NASDAQ is down 130 points.
LIVE CATTLE:
Live cattle futures turned a sluggish start to Wednesday trade into an impressive rally. Although prices were limited to 50- to 90-cent gains and did not post the aggressive closing prices as feeder cattle futures, December contracts did set contract highs at closing bell. This close at $134.57 per cwt is focused on the tighter supplies of beef and cattle expected through the end of the year and well into 2022. Traders are still unwilling to aggressively focus on current gains in boxed beef values, but the expectation that strong underlying support may continue to build is helping to drive buyer support in all contracts. August live cattle closed $0.72 higher at $124.02, October live cattle closed $0.92 higher at $129.05 and December live cattle closed $0.75 higher at $134.57. Cash cattle trade started to open the door in the North Wednesday afternoon, with light trade seen in Nebraska and Iowa at $200 dressed basis and $127 in Nebraska. This is generally $2 per cwt above last week's weighted average, which signals firm market support that feedlot managers have been waiting for over the last couple of weeks. Much more trade is expected to need to be seen but this is a good start. Activity in the South remains quiet with bids still hard to pin down. Asking prices are still near $123 to $124 live and $202 dressed. These asking prices may firm as the week continues and if support develops in futures trade. The Fed Cattle Exchange Auction today listed a total of 3,011 head, of which 1,328 actually sold, 76 were scratched from the auction and 1,607 head were listed as unsold as they did not meet the reserve prices that ranged from $120 to $125. Opening prices ranged from $120 to $121, high bids ranged from $121 to $123. The state-by-state breakdown looks like this: Texas 2,863 total head, with 1,292 head sold at $121 to $122, and 1,571 head went unsold; Kansas 148 total head, with 36 head sold at $123, 36 head unsold and 76 were scratched from the auction.
Wednesday's slaughter is estimated at 120,000 head, 4,000 more than a week ago and 2,000 head more than a year ago. Week to date totals are listed at 360,000 head, 14,000 more than week ago levels and 10,000 ahead year ago totals.
Boxed beef prices closed higher, although prices seem to be much more realistic: choice up $2.02 ($340.08) and select up $3.03 ($309.80) with a movement of 112 loads (47.47 loads of choice, 19.25 loads of select, 17.67 loads of trim and 27.57 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady to $2 higher. Limited trade in the North at $200 per cwt dressed basis Wednesday is a good start for weekly trade. This is generally $2 per cwt higher than last week's average and could easily set the tone for prices within this range through the end of the week.
FEEDER CATTLE:
Feeder cattle futures led the complex higher Wednesday with $2 per cwt gains seen in nearby contracts, as traders continue to focus on the expectation of tighter supplies not only through the summer but during the upcoming months. Early placements seen during the summer will add to the concern of adequate supplies through late summer; this is also adding questions of just how aggressively prices may move higher during fall and winter months. Cattle on feed report estimates point to average estimates of a 7% decrease in placement levels from year-ago levels. This will add some questions to the market, but a lower percentage number is helping to create momentum going into the report. August feeders closed $2.27 higher at $158.85 September feeders closed $2.42 higher at $163.35 and October feeders closed $1.55 higher at $165.82. The CME Feeder Cattle Index for Aug. 17: down $0.65, $154.91.
LEAN HOGS:
Late-day buying stepped into the lean hog complex midweek. The strong support in all livestock trade and softness in stock markets seemed to be a benefit to nearby lean hog trade, which drew additional buyer support across the complex. October futures led the complex higher, but the ability to bring active gains into all nearby contracts is expected to create some additional underlying support through the entire complex. October lean hogs closed $1.20 higher at $89.10, December lean hogs closed $1.05 higher at $82.12, and February lean hog futures closed $0.87 higher at $84.47. Pork prices bounced higher once again with strong double-digit gains in ham markets. Pork cutouts totaled 346.41 loads with 308.47 loads of pork cutouts and 40.94 loads of trim. Pork cutout values: up $2.49, $120.61. Wednesday's slaughter is estimated at 478,000 head, 4,000 head above a week ago and 1,000 head above than year ago. The CME Lean Hog Index for Aug. 17: down $0.47, $109.17.
THURSDAY'S CASH HOG CALL: Steady. Firm underlying support in futures trade and continued strong packer needs is expected to add stability to cash hog prices through the end of the week. Even though cash values continue to bounce higher and lower on morning and afternoon reports, the focus on longer-term stability and gaining access to needed hogs should limit underlying cash hog weakness.
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