GENERAL COMMENTS:
Live cattle futures are now focused on October contract following August's expiration. This has helped spark moderate underlying support, although most gains eroded at the end of the session. Feeder cattle futures posted the most aggressive support in deferred contracts as the continued pullback in grain prices will have further impact in spring and summer contracts where supply tightness is expected to be even more prevalent. Hog prices moved lower on the National Direct Afternoon Hog Report in light trade, down $3.42 with a weighted average of $89.53 on 4,031 head. December corn is down 11 1/2 cents per bushel and December soybean meal is down $2.10 per ton. The Dow Jones Industrial Average is down 52 points and NASDAQ is up 61 points.
LIVE CATTLE:
October live cattle futures led nearby contracts higher with a 67-cent per cwt gain at closing bell. Although all live cattle futures eroded as the session continued, the ability to bounce off Tuesday's lows is creating slow but steady support in the complex. October contracts are still slightly below the 40-day moving average, but other nearby contracts have been able to hold above this threshold as limited follow-through selling is seen in the complex. With all nearby live cattle futures setting contract highs last week, the ability to regain market support following a strong downward shift is likely to rekindle buying in the near future. Trade volume is still expected to remain limited through the rest of the week as traders focus on the Labor Day holiday weekend. October live cattle closed $0.67 higher at $127.57, December live cattle closed $0.12 higher at $133.60 and February live cattle closed $0.15 higher at $137.90. Light cash cattle trade has been reported through the day Wednesday in most areas. Light trade in Kansas and Texas was seen at $124 per cwt, which is generally $1 to $1.50 per cwt higher than last week's average. Although there isn't likely enough trade to establish a trend in Nebraska, the limited volume is seen at $203 per cwt. This is $1 per cwt lower than last week. It is expected more trade will likely develop over the next day or two, with both sides likely to try to finish trading cattle earlier than later given the holiday weekend. Asking prices are seen at $125 and higher in the South and $205 and higher across the North. The Fed Cattle Exchange Auction on Wednesday listed a total of 5,029 head, of which 1,590 actually sold, 791 were scratched from the auction and 2,648 head were listed as unsold, as they did not meet the reserve prices, that ranged from $123 to $124. Opening prices ranged from $121 to $122, high bids ranged from $122 to $124.25. The state-by-state breakdown looks like this: Texas4,500 total head, with 1,590 head sold at $122 to $124.25 (of those sold one lot of 245 were from Mexico), 2,119 head unsold and 791 were scratched from the auction; Kansas 340 total head, all of which went unsold; Oklahoma 189 total head, all of which went unsold.
Wednesday's slaughter is estimated at 119,000 head -- 6,000 more than a week ago and 3,000 head more than a year ago. Week-to-date slaughter is listed at 357,000 head, 8,000 above year ago levels.
Boxed beef prices closed lower: choice down $3.66 ($338.45) and select down $4.46 ($307.57) with a movement of 104 loads (58.85 loads of choice, 18.32 loads of select, 7.38 loads of trim and 19.57 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Early trade at midweek is mixed, higher in the South and lower in the North. Depending on where averages fall, this could lead to steady to firm trade later in the week. The uncertainty of packers needing access to short-term cattle could limit spending ahead of the Labor Day weekend.
FEEDER CATTLE:
Strong triple-digit support developed in deferred feeder cattle futures as traders focused on the underlying support trickling into live cattle trade and strong pressure in grain trade limiting longer-term production costs. All 2022 contract months closed with triple-digit gains, moving prices above $170 per cwt. This overall support seemed to offset late-day softness in nearby contracts with September futures the only contract to trade lower at closing bell. Concerns about short and intermediate beef price support and the current dry weather in many cattle areas could put pressure on nearby futures and limit buyer demand for cattle going into feed yards during early fall. September feeders closed $0.07 lower at $162.92 October feeders closed $0.30 higher at $168.05 and November feeders closed $0.87 higher at $170.52. The CME Feeder Cattle Index 8/31/2021: $158.35, down $1.19.
LEAN HOGS:
October lean hog futures helped set the pace for higher price levels Wednesday, with triple-digit gains. But at the end of the session, traders only offset Tuesday's losses, leaving the market in a choppy but sideways price pattern. Although price levels continue to hold above $90 per cwt, the concern is that moving above August highs could be challenging given the volatility in pork prices and current availability of market-ready hogs. October lean hogs closed $1.35 higher at $90.15, December lean hogs closed $0.52 higher at $82.45 and February lean hog futures closed $0.25 higher at $83.65. Pork prices posted moderate price pressure with strong losses seen in rib cuts. Pork cutouts totaled 240.68 loads with 202.72 loads of pork cutouts and 37.96 loads of trim. Pork cutout values: down $2.47, $106.54. Wednesday's slaughter is estimated at 479,000 head -- 6,000 head above a week ago and up 3,000 from a year ago. Week-to-date slaughter totals are listed at 1.42 million head -- 45,000 above week ago levels and 10,000 above a year ago. The CME Lean Hog Index 8/31/2021: down $0.96, $102.67.
THURSDAY'S CASH HOG CALL: Steady. The back-and-forth market shifts in both futures and cash trade are expected to continue through the end of the week. This is likely to limit active ash market shifts, although overall volume through Thursday may help determine price direction.
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