GENERAL COMMENTS:
Triple-digit losses returned Monday morning as active pressure is evident in both cattle and hog futures. Nearby feeder cattle futures led the shift lower, posting losses of nearly $2 per cwt during early trade. Although prices have moved off initial session lows, the tone of the market remains extremely weak. Little sense of support is developing in hog or cattle trade, which may continue to add further liquidation plans for many traders over the near future. December corn is down 1 1/4 cents per bushel and December soybean meal is up $2.20 per ton. The Dow Jones Industrial Average is up 258 points.
LIVE CATTLE:
Live cattle futures prices needed no help to shift even lower, given the lack of support in beef values and general market liquidation seen over the last couple of weeks. The news of a plant fire in the Grand Island, Nebraska, JBS plant Sunday night didn't help. Although plant operations are likely to resume sometime this week, the overall reduction to procurement numbers (no matter how short) has an impact on overall price support. Triple-digit losses are seen in all nearby live cattle contracts at midday, although pressure continues to lag the softness in feeder cattle futures. Nearby contract prices are still hovering above support levels seen in April and May, but with current market softness, even these price levels may be in danger given the downward movement over the last couple of weeks. Cash cattle activity remains at a standstill Monday morning. Packers and feeders are still generally absent from the market, which is not unusual for a Monday morning. Packer interest will likely not develop until closer to midweek, with feeders also remaining hesitant given the underlying price pressure in futures trade. The focus on establishing market trends and direction through the month of September may be a higher priority than actual price shifts over the next couple of weeks. The ability for feeders to limit downside market movement will have a direct impact on fourth quarter price shifts and the potential to sustain these prices through early 2022. Average cattle prices last week on the 5-Area weekly average slipped $0.82 per cwt from the previous week, with a weighted average of $124.79. This could add further softness to the futures and cash markets through upcoming days. New showlists for the week appear to be mixed, smaller in Kansas and Texas, while somewhat larger in Nebraska and Colorado.
Monday morning's boxed beef prices are lower in light trade, with choice cuts $0.98 lower at $326.24 and selects down $1.16 at $292.21 on a total count of 66 loads. Dow Jones estimated Monday's cattle slaughter at 113,000 -- 5,000 less than a year ago. Due to the holiday last week, week-to-week comparisons are of little relevance. JBS' Grand Island, Nebraska, plant is dark after Sunday's fire; this could reduce slaughter levels over the next few days.
FEEDER CATTLE:
Feeder cattle futures are feeling pressure Monday in all nearby contracts. Although prices backed away from initial losses, the lack of buyer support has allowed even more price pressure in nearby contracts at midday. October contracts are leading the complex lower, falling $2.12 per cwt with prices at $155.55 per cwt. This downward market shift adds to the already bearish market slide seen over the last couple of weeks. Any hope the weekend break would have helped rekindle buyer interest has been dashed as all nearby contracts are holding aggressive, triple-digit losses. Strong initial losses in corn prices seemed to give some indication at least production costs would be reduced; but corn markets have quickly rebounded from initial lows, as traders try to focus on upcoming supply levels for corn. The CME Feeder Index was priced at $155.00 for Sept. 9.
LEAN HOGS:
Triple-digit losses are flooding into lean hog futures once again. Nearby December contracts tumbled over $5 per cwt in the last two trading sessions with market bearishness still developing across the entire complex. Traders continue to focus on expectations for strong pork supplies as production levels are expected to continue to increase in 2022; overall demand is projected to remain steady to firm. The price shift late last week not only added significant fundamental concerns to the market, but an aggressive break in technical support levels has created additional widespread liquidation through the entire complex. December futures are leading the market lower with $1.80 per cwt losses at midday; but all contracts have held triple-digit losses through late morning. Pork prices posted strong losses in most cuts Monday as meat traders try to adjust to the weaker market structure. Cutouts are down $2.87 at $102.23 Monday morning on 153.41 loads. Negotiated hog prices are $2.35 lower per cwt with a weighted average price of $83.32 per cwt on 3,413 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $94.96 per cwt. Dow Jones estimated Monday's hog slaughter at 475,000 -- 9,000 less than a year ago. Plants were dark last Monday due to the Labor Day holiday. The CME Lean Hog Index is estimated at $97.96 for Sept. 8.
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