GENERAL COMMENTS:
Feeder cattle was the market to watch Thursday afternoon with nearby contracts trading $3 to $4 per cwt lower earlier in the session. This abrupt weakness not only caused prices to break out of the recent market trend, but also sparked triple-digit losses in live cattle trade. Hog futures were isolated enough from the cattle market losses due to the overall limited pre-holiday trade volume, but this could lead to more price swings in all markets Friday. Hog prices moved lower on the National Direct Afternoon Hog Report in light trade, fell $0.62 with a weighted average of $88.91 on 5,650 head. December corn is up 2 3/4 cents per bushel and December soybean meal is down $3.50 per ton. The Dow Jones Industrial Average is up 131 points and NASDAQ is up 21 points.
LIVE CATTLE:
Live cattle futures got caught up in the widespread cattle market weakness Thursday. A combination of limited trade volume ahead of the holiday weekend and sharp losses in feeder cattle markets q helped to erode all contracts. Despite the strong pressure in the market, the fact that October through August contracts traded in such a similar pattern, falling $1.40 to $1.60 per cwt through the day, left traders focused on widespread market softness, not associated with any specific fundamental market move. Although long-term tightness is still expected to be seen, prices are moving away from last week's contract highs with traders concerned of further fallout in boxed beef values after the Labor Day holiday. October live cattle closed $1.52 lower at $126.05, December live cattle closed $1.40 lower at $132.20, and February live cattle closed $1.57 lower at $136.32. Cash cattle trade is slowly developing Thursday with several deals in Kansas at $123 per cwt. This is steady to weak with Wednesday's trade, but generally steady with last week. Trade is seen in Nebraska on a few cattle at $125 per cwt, but bids remain active at $200 dressed basis, and $124 to $125 per cwt live basis. It is likely that some additional business should develop either late Thursday afternoon or sometime Friday. Given the variability of negotiated cash cattle trade over the last few weeks, it would not be surprising if both sides pack it up and wait until after the long weekend before more cattle are traded. Asking prices remain at $124 and higher per cwt in the South and $204 and higher in the North. The softness in beef values and futures trade is likely to keep packers from pushing bids higher, and feeders seem comfortable carrying extra cattle into the coming weeks.
Thursday's slaughter is estimated at 119,000 head, 5,000 more than a week ago and steady with a year ago. Week to date slaughter is listed at 476,000 head, 3,000 above year ago levels.
Boxed beef prices closed lower: choice down $0.53 ($337.92) and select down $2.60 ($304.97) with a movement of 81 loads (48.73 loads of choice, 16.77 loads of select, no loads of trim and 15.10 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Limited trade over the last couple of days is creating sluggish market movements. Although it is expected that some additional cattle need to be purchased, the potential that prices will remain generally steady with last week could limit the number of feeders willing to move cattle at current prices.
FEEDER CATTLE:
Losses in feeder cattle futures set a weaker tone to the Thursday trading session with most nearby contracts trading $3 to $4 per cwt lower through much of the session. Although prices bounced off session lows at the closing bell, the significant shift lower in prices is likely to create a significant impact Friday morning. With markets closed Monday for Labor Day, trade volume has already been light through much of the week. This is expected to keep market volume even more subdued Friday, which may add to price volatility heading into the long holiday weekend. Corn prices posted narrow gains, but the breakaway from sharp losses seen so far this week may indicate that renewed buyer support may develop in grain markets, and lead to higher production costs once again. September feeders closed $2.62 lower at $160.30 October feeders closed $3.00 lower at $165.05 and November feeders closed $2.80 lower at $167.72. The CME Feeder Cattle Index for Sept. 1: $157.94, down $0.41.
LEAN HOGS:
Despite the market swings in cattle trade, lean hog futures remained extremely calm, with nearby contracts holding mixed, but generally steady price shifts. The back-and-forth market moves in pork cuts and cash hog prices over the last several of days has limited market direction in the complex, allowing nearby hog contracts to hold the current sideways trading pattern. With very few traders in the market, especially deferred contracts due to the upcoming long holiday weekend, markets remain stable. Firm gains are seen in summer 2022 contracts, but at this point, the lack of trade interest in the market is allowing markets to shift in a wider range with little additional information available to the market at this point. October lean hogs closed $0.30 lower at $89.85, December lean hogs closed $0.15 lower at $82.32, and February lean hog futures closed $0.25 higher at $83.90. Pork prices bounced higher as active support in ham cuts was offset by similar losses in belly prices. Pork cutouts totaled 302.20 loads with 274.28 loads of pork cutouts and 27.92 loads of trim. Pork cutout values: up $2.73, $109.27. Thursday's slaughter is estimated at 478,000 head, 2,000 head above a week ago and down 2,000 from a year ago. Week to date slaughter totals are listed at 1.90 million head, 47,000 above week ago levels, and 8,000 above a year ago. The CME Lean Hog Index for Sept. 1: down $1.35, $101.32.
FRIDAY'S CASH HOG CALL: Steady. The back-and-forth shifts in both futures and cash trade is expected to continue through the end of the week.
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