GENERAL COMMENTS:
Firm morning support in nearby live cattle futures helped bring limited buying into the livestock complex Thursday. October live cattle futures are leading the complex higher with a $1 per cwt gain at midday, but support seen in the rest of the complex earlier in the day has started to slowly fade, allowing prices to remain mixed in cattle and hog futures. December corn is down 1 cent per bushel and December soybean meal is down $1.90 per ton. The Dow Jones Industrial Average is up 124 points.
LIVE CATTLE:
Live cattle futures are leading the shift higher Thursday morning following market weakness earlier in the week. October contracts are the leader at $1 per cwt higher, reaching above $124 per cwt once again. The supportive moves through the week in cash cattle trade are bringing underlying support to all nearby contracts, although buyer support quickly disappears in deferred contract months. Even though the market remains oversold on a long-term basis following the liquidation in the last three weeks, commercial buyers are still hesitant to quickly step into the market given uncertainty of beef market direction over the coming weeks. Cash cattle trade continues to develop in the South through the morning with Kansas reported at $123 per cwt. This is $1 per cwt lower than the bulk of Wednesday's trade, but steady with last week's price levels. Trade in the North has not yet developed following light to moderate trade Wednesday. Asking prices remain at $125 to $126 live basis in the South and $205 and higher dressed in the North. Trade Wednesday may have set the overall tone for the week with the bulk of trade in the South at $124 per cwt, $1 higher than last week, while Northern dressed cattle were reported at $203 per cwt. This is also generally $1 per cwt higher than last week's average. Some additional trade is likely to trickle into the market over the next couple of days. Packers appear to have immediate needs well in hand, which is causing most of the cattle sold through the week to be delivered in the last two weeks of September.
Thursday morning's boxed beef prices are lower in light trade, with choice cuts $1.59 lower at $333.27 and selects down $1.76 at $296.41 on a total count of 51 loads. Dow Jones estimated Thursday's cattle slaughter at 121,000 -- steady with a week ago and 1,000 more than year ago levels.
FEEDER CATTLE:
Positive moves in feeder cattle trade Thursday morning have been a welcome sight, although the inability to hold early gains is creating some concern that market prices may continue to erode and could close lower by the end of the session. Nearby contracts are still able to hold narrow to moderate gains of 12 to 30 cents per cwt based on spillover firmness in the live cattle trade. The underlying bearish tone in the cattle complex continues to hold as September and October futures have fallen $8 to $9 per cwt over the last three weeks. Following contract highs through the middle of August, traders have quickly backed away from these supportive price levels, although at this point it is uncertain if feeder cattle traders have been able to establish strong support levels at current price levels. This could add further weakness in the days and weeks to come as the bulk of fall sales of calves is about to begin and could put even further pressure on price levels in the short term. Even though cattle supply tightness continues to be a strong concern, the short-term pressure in the market may continue to keep markets well below summer price levels. The CME Feeder Index was priced at $157.47 for Sept. 7.
LEAN HOGS:
Lean hog futures trade is mixed as initial more volume moved into the complex. October contacts are 22 cents lower, although the rest of nearby contracts are posting extremely narrow gains. This continues to add to the sideways trend in the market with prices hovering at the lower end of short-term trading ranges, but still well above support levels seen in early August. Traders are also focused on the moderate to wide shifts in daily pork values and cash hog values, as it has been very difficult to establish a good fundamental market trend based on fluctuating pork markets. Limited volume seen over the last couple of weeks has added to this market volatility although traders continue to focus on underlying support from both domestic and export markets. Cutouts are up $0.58 at $110.98 Thursday morning on 150.15 loads. Negotiated hog prices are $2.22 lower per cwt with a weighted average price of $85.95 per cwt on 4,350 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $96.69 per cwt. Dow Jones estimated Thursday's hog slaughter at 480,000 -- 3,000 higher than a week ago, while 5,000 less than year ago levels. The CME Lean Hog Index is estimated at $98.74 for Sept. 7.
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