GENERAL COMMENTS:
Livestock markets, like most other commodity markets Monday, were under pressure most of the session. Concerns surrounding China Property industry markets, specifically the financial woes of Chinese company, Evergrande, took center stage Monday. Feeder cattle futures closed mostly higher in late day trade, while additional aggressive pressure was seen in hog markets. Hog prices moved lower on the National Direct Afternoon Hog Report in light trade, falling $2.16 with a weighted average of $79.32 on 6,367 head. December corn is down 5 1/2 cents per bushel and December soybean meal is down $2.40 per ton. The Dow Jones Industrial Average is down 614 points and NASDAQ is down 330 points.
LIVE CATTLE:
Given the aggressive outside market pressure and volatility seen Monday, a quick glance at the live cattle complex would not indicate significant market uncertainty. Early market losses seemed to be offset by buyers trying to find more stability and focusing on potential for fundamental support in livestock and meat markets. This allowed prices to move well off session lows, as spot October contracts closed just 2 cents lower, while December contract buying held a gain of 55 cents per cwt. The overall market-wide volatility may still have further impact in the direction of live cattle trade over the next couple of days. Nearby contracts seem to be finding significant technical support at or just above last week's lows. This could help to rekindle noncommercial buyer support, which has been actively liquidating positions over the last several weeks. October live cattle closed $0.02 lower at $122.77, December live cattle closed $0.55 higher at $128.07 and February live cattle closed $0.02 lower at $131.00. Cash cattle interest remains subdued with asking prices and bids still undeveloped for the week. Significant trade is likely to be pushed off until the second half of the week, but the direction of both beef values and futures trade may contribute significantly to the direction and activity level of negotiated cash markets. Showlists for the week are reported as generally mixed with lower offered cattle in Texas, Nebraska and Colorado, while Kansas posted larger cattle numbers on showlists. The five-area weekly average price released Monday morning posted an average cash price last week of $123.88 per cwt. This is $0.91 per cwt lower than the previous, putting more focus on the underlying weakness in cash markets last week. Concerns that seasonal lows may not have been hit last week could create some additional volatility through the cash markets over the next several days.
Monday's slaughter is estimated at 119,000 head, 5,000 more than a week ago and 1,000 head above year ago totals.
Boxed beef prices closed higher: choice up 1.19 ($315.66) and select up $1.00 ($280.75) with a movement of 84loads (40.40 loads of choice, 20.81 loads of select, 9.37 loads of trim and 13.41 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Steady. Cash activity remained silent Monday, with limited interest expected Tuesday morning. Packer interest is expected to improve slightly over the next couple of days but asking prices may not be widely seen until the weekly direction of futures trade develops. The majority of trade is expected to be seen midweek or later.
FEEDER CATTLE:
Despite the weakness and price pressure in nearly all markets Monday, feeder cattle futures were able to rebound from early session losses, closing higher in all but one contract month. The underlying support in feeder cattle futures continues to focus on the pressure that has already been built into the feeder cattle market, and overall cattle industry in general, as well as additional softness in grain prices. Lower feed and production costs are seen, helping feeder cattle traders to look at the potential of steady to higher prices. Although gains remained minimal, the fact that prices moved higher at all is very impressive given the bearish tone through the entire commodity complex. September feeders closed $0.12 higher at $155.00, October feeders closed $0.30 higher at $156.67 and November feeders closed $0.52 higher at $156.62. The CME Feeder Cattle Index for Sept. 17: $153.75, down $0.85.
LEAN HOGS:
Given the bearishness of outside markets, including stock markets, financial trade and most other commodities, it is not surprising that lean hog futures slid lower Monday. However, the fact that other livestock futures found limited but noticeable buyer support in the last half of the day, and none developed in lean hog futures, left some traders concerned that follow-through weakness may be developing in the coming days and weeks. Following last week's gains, nearby contracts are still above support levels, but the fact that China is in the middle of the most recent stock market tumble creates short- and long-term concern about demand for pork products. Spring and summer 2022 contracts saw the most aggressive weakness, as these markets may see the most impact to a longer-term economic recession in China. There are questions about overall hog supply levels over the next year also. With the quarterly hogs and pigs report being released at the end of the week, we should have a little better understanding of the domestic hog herd size in the upcoming months. October lean hogs closed $0.75 lower at $84.97, December lean hogs closed $0.82 lower at $74.22 and February lean hog futures closed $1.17 lower at $77.05. Pork prices eroded Monday afternoon with firm losses in ham and butt cuts overshadowed strong price gains in the belly market. Pork cutouts totaled 317.20 loads with 293.23 loads of pork cutouts and 23.96 loads of trim. Pork cutout values: down $2.52, $102.89. Monday's slaughter is estimated at 478,000 head, 7,000 more than a week ago and down 1,000 from a year ago. The CME Lean Hog Index for Sept. 17: down $0.22, $94.04.
TUESDAY'S CASH HOG CALL: Steady to $1 lower. Firm pressure in futures trade continues to leave the hog complex soft. Packers continue to focus on maximizing daily and weekly slaughter schedules, although given the amount of market-ready hogs available, cash values are likely to see minimal support in the upcoming days.
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