GENERAL COMMENTS:
Lean hog futures stole the attention of the entire livestock complex with aggressive triple-digit gains seen in nearby and deferred contracts. Spot October lean hog futures posted a $3.20 per cwt rally, moving above $85 per cwt for the first time in a week. The attention in hog trade seemed to allow for cattle traders to take a breath, with prices mixed in feeder cattle markets and lower in all nearby live cattle trade. Hog prices moved lower on the National Direct Afternoon Hog Report in light trade, falling $1.86 with a weighted average of $81.64 on 5,458 head. December corn is down 4 cents per bushel and December soybean meal is up $4.50 per ton. The Dow Jones Industrial Average is down 35 points and NASDAQ is up 19 points.
LIVE CATTLE:
Live cattle futures wandered lower in most contracts Thursday. Underlying pressure in several outside markets limited follow-through buyer support in nearby contracts as traders try to balance technical and fundamental direction within the complex. Steady to weak cash cattle trade as well as pressure in morning boxed beef prices limited any additional interest in buyers who have become comfortable sitting on the sidelines. Even though prices didn't shift higher Thursday, traders are also hesitant to test early week lows. This could help to establish longer-term underlying buyer support which may develop either late this week or early next week. October live cattle closed $0.57 lower at $123.60, December live cattle closed $0.87 lower at $128.57, and February live cattle closed $0.50 lower at $132.65. Cash cattle activity remains quiet Thursday as both sides appear to be uncertain given the early softness in beef values and pressure in live cattle trade. Given the expected amount of cattle sold Wednesday, it is likely that more cattle need to be traded during the day Friday. Cattle which traded Wednesday were seen at $123 to $125 per cwt live basis in the South, mostly steady, and mostly $200 dressed in the north, although the range was listed at $196 to $200. Northern cattle were generally $1 per cwt lower than last week's average. Unless wide market shifts are seen over the next day, it is likely that the tone of the market has been set. This could limit active movement as packers and feeders who are able to wait until next week, may stay out of the market Friday.
Thursday's slaughter is estimated at 120,000 head, steady with a week ago and year ago totals. Week to date levels are at 475,000 head, 110,000 ahead of last week and 5,000 below year-ago levels. Due to the active post-holiday kill rate last Saturday, week to date totals will not align well with previous levels until the end of the week.
Boxed beef prices closed lower: choice down $1.82 ($318.00) and select down $3.62 ($80.27) with a movement of 141 loads (90.30 loads of choice, 23.09 loads of select, 8.60 loads of trim and 18.68 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady to $1 lower. Early trade that developed Wednesday would indicate that the weekly direction of trade will remain steady to weak compared with week-ago levels. This could leave both sides holding out until late Thursday or Friday, but most of the needed activity could likely be done in the next day.
FEEDER CATTLE:
Feeder cattle futures became the most stable of livestock markets with mixed price levels seen through the Thursday session. September contracts led the complex higher with a $1.15 per cwt rally, while the rest of the complex was stuck in a wide but sideways market shift from 45 cents lower to 60 cents higher. After hitting three-month lows early in the week, the potential for further market support moving into the market has improved as the feeder cattle futures triggered active noncommercial buying based on technical support near $152 per cwt. Spot month contracts have now moved over $3.50 per cwt above these recent lows, allowing traders to become much more comfortable establishing a more rigid market range. Although limited volume is expected Friday, the potential to keep prices within a narrow to moderate range would likely help to draw underlying support through the cattle complex at the end of the week. September feeders closed $1.15 higher at $155.87, October feeders closed $0.60 higher at $157.10 and November feeders closed $0.27 lower at $157.30. Feeder cattle sales have been reported as mixed compared to week ago levels at Auctions over the last couple of days. Southern sales appear to be unevenly steady in light movement and moderate demand. Northern sales are seen $3 to $7 per cwt higher in the Torrington, Wyoming, auction, with the market reported as active. Market support may continue to be based on regional interest over the coming weeks as more calves through the sale ring. The CME Feeder Cattle Index for Sept. 15: $154.02, down $0.18.
LEAN HOGS:
Strong gains redeveloped in all lean hog futures trade Thursday as spot October contracts led the market higher with a $3.20 per cwt rally. A combined two-day gain in October futures surpassed a $5 per cwt, as buyers aggressively moved into the market and likely put early week losses behind them. The move higher Thursday has moved back to where prices traded just one week ago, creating an impressive market turnaround. It is uncertain just how active follow-through support will be over the next couple of weeks, but the moves over the last two days have created the potential for another $1 to $3 per cwt market rally based on technical support building into the complex. This recent market move does also establish a very wide $10 range for the lean hog complex. The challenge with this wide of range is that prices can wander a long way in either direction without hitting technical market triggers. October lean hogs closed $3.20 higher at $85.47, December lean hogs closed $2.20 higher at $74.45, and February lean hog futures closed $2.15 higher at $77.52. Pork prices shifted slightly higher with strong gains in loin and belly cuts offsetting aggressive losses in ham prices. Pork cutouts totaled 286.46 loads with 259.51 loads of pork cutouts and 26.95 loads of trim. Pork cutout values: up $0.27, $105.97. Thursday's slaughter is estimated at 463,000 head, 15,000 less than a week ago and down 6,000 from a year ago. Week to date slaughter is listed at 1.88 million head. Currently 41,000 below year ago levels. The CME Lean Hog Index for Sept. 15: down $0.90, $94.45.
FRIDAY'S CASH HOG CALL: Steady. Cash hog prices may not have found the groove seen in futures at this point, although underlying support is starting to slowly build. This is likely to leave markets general steady early in the day, but price variability may continue as Friday continues.
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