GENERAL COMMENTS:
Active gains flooded lean hog futures trade Thursday morning with December through July contracts up $2 to $3 per cwt at midday. Underlying pressure seen early in the week has run its course, allowing for firm commercial buying to redevelop near the end of the week. With the monthly Cattle on Feed report and quarterly Hogs and Pigs reports both released Friday afternoon, the focus on changing inventory levels and impact on supplies over the next year will continue to be a key trading factor over the next couple of days. December corn is up 2 3/4 cents per bushel and December soybean meal is down $0.80 per ton. The Dow Jones Industrial Average is up 510 points with Nasdaq adding 127 points.
LIVE CATTLE:
Live cattle futures trickle higher in limited morning trade Thursday. The ability to sustain midweek price support is the major takeaway from morning activity as uniform price gains are seen across the entire livestock complex. October futures are showing limited gains of 2 cents per cwt at midday, although the most active support of 40 to 50 cents per cwt is seen through the second quarter of 2022 contracts. The focus on supply tightness into next year is helping slowly draw traders back to the table, although market stability seems to be the consensus of the entire complex. Beef in the weekly report posted total export sales of 15,800 metric tons (mt) while shipments last week of 18,200 mt were reported. Japan, South Korea and China were the top three destinations for new sales and shipments for the week. Additional focus is also expected to be put on Friday's Cattle on Feed report. This may not bring about wide market shifts over the next two days but could cause moderate position adjustments ahead of the report. Pre-report estimates are pointing to total on feed numbers at 98.1% of year-ago levels. This estimate would put total on feed numbers at 11.17 million head on Sept. 1. Typically cattle on feed levels post yearly lows in September. The current estimate indicates seasonal lows may have already been seen in the August report. Cash cattle markets remain quiet Thursday morning following light to moderate trade which developed Wednesday. Trade in the North on a dressed basis was seen from $193 to $198 per cwt with most trade at $198 per cwt. This is generally $1 per cwt lower than last week's weighted average. Live trade in the South developed at $123 to $124 per cwt, which is steady with last week. The amount of trade reported Wednesday is likely to have set the tone for the week and could be the bulk of needed trade this week. But it is still likely a few additional sales will trickle into the market over the next two days. At this point, it is not likely many are willing to hold out until after Friday's Cattle on Feed report to trade cattle. Asking prices on cattle still left on showlists remain at $200 in the North and $125 live basis in the South.
Thursday morning's boxed beef prices are lower in light trade, with choice cuts $0.43 lower at $307.40 and selects down $0.69 at $274.81 on a total count of 52 loads. Dow Jones estimated Thursday's cattle slaughter at 118,000 -- 3,000 less than a week ago and 4,000 less than year ago levels.
FEEDER CATTLE:
Light buyer support is trickling back into feeder cattle markets Thursday morning as widespread buyer support in nearly all outside markets and aggressive gains in stock prices have stimulated buyer activity. Very little new fundamental market direction is seen during morning trade, although it is likely noncommercial traders are starting to retest the market following several weeks of liquidation. Traders are also starting to focus on Friday's Cattle on Feed report. Early estimates point to a 1% drop in placements during August compared to 2020. But this estimate has the widest range between survey recipients, which could bring additional volatility to the market. Given the amount of early placements this year, it is quite possible placements could be much lower than estimated, which could spark aggressive market gains early next week. The CME Feeder Index was priced at $153.57 for Sept. 21.
LEAN HOGS:
Lean hog futures have finally broken out of the market slide which has consumed the complex for the last week. This has created a buy opportunity in all contracts with December through July futures holding gains above $2 per cwt at midday. December lean hog futures are leading the complex higher with gains near $3 per cwt, as traders focus on renewed underlying support from commercial and noncommercial traders. Pork export sales last week were reported at 32,600 mt while shipments posted 36,100 mt. China new purchases were somewhat disappointing with only 900 mt moving to the country. Mexico was the big buyer last week with exactly half of all weekly export sales moving to Mexico. Traders are also starting to focus on Friday's Quarterly Hogs and Pigs report. Although this report typically isn't a huge market mover, it is important because it helps to indicate both current supply situations and future supply intentions of the industry. Cutouts are up $4.55 at $111.47 Thursday morning on 151.21 loads. Negotiated hog prices are reported at $76.72 per cwt on 3,475 head. Due to unreported morning cash prices Wednesday, price comparisons are not available. Dow Jones estimated Thursday's hog slaughter at 476,000 -- 2,000 less than a week ago, while 7,000 more than year ago levels. The CME Lean Hog Index is estimated at $91.89 for Sept. 22.
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