GENERAL COMMENTS:
From Friday to Friday, livestock futures scored the following changes: October live cattle up $0.13; December live cattle up $0.63; September feeder cattle off $0.25; October feeder cattle up $0.97; October lean hogs up $1.55; December lean hogs up $1.75
Livestock trade remained generally sluggish through most of the Friday session with traders more focused on outside market moves and the afternoon reports. Both monthly cattle on feed and quarterly hogs and pigs reports were released Friday afternoon, making it a huge report day for the livestock complex. Cattle numbers came in higher than expected, while hog inventory levels were well short of pre-report expectations. This is likely to create moderate market shifts Monday morning with price separation between the hog and cattle markets likely also playing into the overall market volatility possible next week. Hog prices moved higher on the National Direct Afternoon Hog Report in light trade, adding $0.40 with a weighted average of $76.93 on 2,780 head. December corn is down 2 1/2 cents per bushel and December soybean meal is down $1.10 per ton. The Dow Jones Industrial Average is down 10 points and NASDAQ is down 39 points.
LIVE CATTLE:
Cattle on feed numbers in Friday afternoon's report posted higher than expected cattle in the nation's feedlots, creating the potential for further market pressure early next week. Total cattle on feed is listed at 11.23 million head. This is 1% below year -go levels, but still well above pre-report estimates. This total puts this year's Sept. 1 inventory level at the second highest September total on record, only following 2020's pandemic impacted inventory levels. All trade was done and markets closed before the report was released, but traders posted light to moderate pressure in all contract months as traders tried to adjust positions ahead of the report. October live cattle closed $0.30 lower at $122.92, December live cattle closed $0.47 lower at $128.15 and February live cattle closed $0.32 lower at $132.62. Cash cattle trade is expected to be essentially done for the week with very little if any activity seen Friday afternoon. There is still a chance that a few cattle may be sold late afternoon following the cattle on feed report. But for now, it appears that both packers and feeders are comfortable with the amount of cattle sold and willing to hold out until next week before doing any additional significant trade. Cattle traded earlier in the week at $123 to $124 per cwt live basis in the South, and mostly $198 dressed in the North. This is generally steady with last week in the South and $1 per cwt lower in the North. Asking prices on cattle still left on showlists Friday afternoon remain at $124 live and $198 dressed.
Friday's slaughter is estimated at 110,000 head, 8,000 less than a week ago and 3,000 less than year ago totals. Weekly totals are listed at 641,000 head including Saturday's expected kill of 54,000 head, 16,000 less than a week ago and 14,000 head less than year-ago levels.
Boxed beef prices closed lower: choice down $2.28 ($303.32) and select down $0.48 ($274.53) with a movement of 104 loads (49.15 loads of choice, 12.06 loads of select, 17.95 loads of trim and 25.02 loads of ground beef).
MONDAY'S CASH CATTLE CALL: Steady. Midweek trade set the tone for steady to lower cash cattle prices. Monday activity should remain typically sluggish with bids and asking prices likely not being seen until late Tuesday or Wednesday next week. With packers still buying most negotiated cattle for delivery in two to three weeks, the need for immediate cattle is sustaining a market for buyers through late September.
FEEDER CATTLE:
Feeder cattle futures remained mixed at the end of the session with most contracts posting moderate gains. The focus in the cattle complex has moved to the anticipation of the afternoon cattle on feed report, which kept prices moving within a mixed trading range through the session. Consistent late day buyer interest moved into October through April futures with prices 40 to 55 cents per cwt higher. Although spot September contracts posted the only loss, this move is likely due more to limited trade volume than a fundamental change in market direction. Next week traders will not only be focused on cattle placements in the report, but also CFTC data concerning noncommercial trade involvement through the last week. Feeder cattle placements during the month of August posted 2.1 million head of cattle moving into feed yards. This is 2% above year-ago levels, and well above analyst estimates for placements for the month. Not only is this significantly above year-ago levels, but it represents the largest monthly placement level since last November and largest August placement since the series began. The expectation is that placements over the next two months will continue to increase along historical patterns, potentially adding long term pressure to the market. September feeders closed $0.27 lower at $154.62, October feeders closed $0.5 higher at $157.35 and November feeders closed $0.47 higher at $158.57. The CME Feeder Cattle Index for Sept. 23: $154.04, down $0.45.
LEAN HOGS:
Lean hog futures regained moderate to strong market support at the end of the week. October contracts, which failed to follow the rest of the complex aggressively higher Thursday, made up ground, posting a $2.52 per cwt rally. This spot month contract was the only lean hog contract to post triple-digit gains, with the rest of the market holding light to moderate spillover support. Traders were slightly hesitant to post aggressive market support as many were waiting to determine the results from the afternoon hogs and pigs report. Hog and pig inventory levels on Sept. 1 are 4% lower than year-ago levels. Although inventories have grown 900,000 head since June 1, the overall number of hogs is well below estimated levels and likely to spark further market support early next week. Farrowing intentions appear to be slowly growing, but not enough to make significant impact in the short term. October lean hogs closed $2.52 higher at $87.27, December lean hogs closed $0.30 higher at $76.80, and February lean hog futures closed $0.20 higher at $79.67. Pork prices surged higher Friday afternoon following aggressive double-digit gains in ham and loin cuts. Pork cutouts totaled 360.59 loads with 327.89 loads of pork cutouts and 32.70 loads of trim. Pork cutout values: up $6.48, $110.77. Friday's slaughter is estimated at 472,000 head, 2,000 more than a week ago and up 10,000 from a year ago. Week to date totals of 2.578 million head including Saturday's estimated runs of 237,000, up 41,000 head from week ago levels. The CME Lean Hog Index for Sept. 23: down $0.42, $91.47.
MONDAY'S CASH HOG CALL: Steady. The strong late week support in lean hog futures and support in pork cuts over the last couple of days is likely to help bring some much-needed stability to cash hog prices through the last week of September.
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