GENERAL COMMENTS:
Triple-digit gains in deferred cattle futures helped rekindle positive long-term market support through the live cattle and feeder cattle complex. Although the market remains generally fragile following recent losses, strong support in outside markets helped stimulate moderate buying support in nearby and deferred futures. Lean hog futures continue to shift lower as traders slowly back away from last week's rally. Hog prices moved lower on the National Direct Afternoon Hog Report in light trade, falling $0.98 with a weighted average of $77.16 on 4,635 head. December corn is up 8 1/2 cents per bushel and December soybean meal is unchanged. The Dow Jones Industrial Average is up 476 points and NASDAQ is up 192 points.
LIVE CATTLE:
Strong underlying gains developed in deferred live cattle futures, helping to push all 2022 contracts to triple-digit gains. The focus on renewed gains of outside markets and a much less bearish overall outlook on the economic situation Wednesday helped bring hesitant traders from the sidelines for the first time this week. Nearby live cattle futures posted moderate support, but the focus on trade continues to be based on contracts next year when overall cattle and beef supplies are expected to be even tighter than current levels. Traders are also expected light to moderate pullback in on feed numbers in Friday's report, which would help confirm the overall tightness in supply levels through the first half of 2022. October live cattle closed $0.82 higher at $123.27, December live cattle closed $0.75 higher at $128.55, and February live cattle closed $1.12 higher at $132.60. Cash cattle markets started trading right away Wednesday morning. Early morning trade is somewhat unusual, but packer interest seemed to be moderately active through the day. This attracted light to moderate trade levels with most trade steady to $1 per cwt lower than last week's weighted averages. Trade in the South is reported at mostly $124 per cwt, steady with last week. While dressed trade in Nebraska developed at $198 per cwt, $1 per cwt lower than last week's average. Asking prices on most cattle still on showlists remain at $125 live and $200 dressed. The Fed Cattle Exchange Auction Wednesday listed a total of 3,941 head, of which 444 actually sold, 628 were scratched from the auction and 2,869 head were listed as unsold, as they did not meet the reserve prices that ranged from $122 to $124.50. Opening prices ranged from $118 to $122, high bids ranged from $124 to $124.25. The state-by-state breakdown looks like this: Texas, 2,958 total head, with 444 head sold at $124 to $124.25, 1,886 head went unsold and 624 were scratched from the auction, note of these 624 head that were scratched, 273 head were sold at $124 before the Fed Cattle Exchange Auction started. Kansas, 533 total head, all of which went unsold; Nebraska, 450 total head, all of which went unsold.
Wednesday's slaughter is estimated at 122,000 head, 1,000 more than a week ago and 1,000 more than year ago totals.
Boxed beef prices closed lower: choice down $3.54 ($307.83) and select down $2.51 ($275.50) with a movement of 186 loads (102.40 loads of choice, 52.13 loads of select, 3.14 loads of trim and 28.22 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady to $1 lower. Light to moderate trade that developed Wednesday morning could be setting the tone for cash cattle activity for the week. More trade is expected over the next two days, but prices may not move significantly from current levels.
FEEDER CATTLE:
Active price support moved into most feeder cattle trade Wednesday with triple-digit gains seen in October through January contracts. September futures gave back initial support with very limited trade in the spot month contract left most traders focusing on the October and November contracts. Strength in outside markets helped to bring buyers back from the sidelines, as feeder cattle futures followed the lead of live cattle futures higher. Even with the support seen in nearby contracts, feeder cattle futures continue to hover in the lower end of the price cycle, creating additional potential for noncommercial traders to step back into the market following active liquidation over the last month. Traders are also starting to focus on the upcoming cattle on feed report ,which will be released Friday afternoon. Cattle placements during the month of August are estimated at 99.5% year ago levels. Analysts ranges for placements remain wide, from 95 to 102.8% of last year, creating less agreement of just where final numbers may land. This could create a major shift in price levels early next week. September feeders closed $0.05 lower at $154.80, October feeders closed $1.05 higher at $157.67 and November feeders closed $1.27 higher at $158.22. The CME Feeder Cattle Index for Sept. 21: $153.57, down $0.20.
LEAN HOGS:
Lean hog futures shifted lower for the third consecutive day following additional concerns of fundamental demand pressure. Even though most other outside markets posted moderate to strong gains, and neighboring cattle futures bounced firmly higher, concerns of further market liquidation led to softness in lean hog futures. October futures led the market losses with a 52-cent loss, while the rest of the complex remained extremely quiet, holding narrow price pressure. Continued concerns about further potential softness in pork values as questions of global pork demand for U.S. pork supplies leaves traders hesitant to retract previous losses. Spot October contracts remain $3.50 per cwt above significant long term support levels, but the ability to rekindle last week's active buyer interest seems very uncertain at this point. The quarterly hogs and pigs report will be released Friday afternoon. The expectation is that continued losses in hog numbers will be seen, as tighter supplies are likely through the end of the year. October lean hogs closed $0.52 lower at $83.85, December lean hogs closed $0.22 lower at $73.37, and February lean hog futures closed $0.17 lower at $76.52. Pork prices rallied higher Wednesday afternoon with strong gains in ham cuts. Pork cutouts totaled 353.80 loads with 287.50 loads of pork cutouts and 66.30 loads of trim. Pork cutout values: up $4.16, $106.92. Wednesday's slaughter is estimated at 471,000 head, 4,000 more than a week ago and down 15,000 from a year ago. The CME Lean Hog Index for Sept. 21: down $0.92, $92.65.
THURSDAY'S CASH HOG CALL: Steady to $1 lower. Additional pressure in futures trade, combined with limited interest in making up lost procurement levels from earlier in the week is likely to leave packers well equipped to gain access to needed market-ready hogs without increasing negotiated price levels.
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