GENERAL COMMENTS:
Hopes that aggressive triple-digit gains in live cattle and feeder cattle Tuesday would change the direction of the market are being dashed Wednesday morning. Moderate to active losses are seen across the cattle market, creating concern that the bounce higher may be nothing more than positioning by traders who are viewing the market as still bearish. Triple-digit losses in feeder cattle futures remain the most concerning at this point, as this has the potential to draw additional underlying weakness into the market despite tighter feeder cattle numbers expected moving into feedlots over the upcoming months. Hog futures are still moving in the opposite direction of cattle trade. Helping to bring limited to moderate support into most lean hog futures Wednesday morning. December corn is up 11 cents per bushel and December soybean meal is down $2.20 per ton. The Dow Jones Industrial Average is up 114 points.
LIVE CATTLE
Live cattle futures remain lightly traded Wednesday morning with limited buyer support trying to step into the market but is being overshadowed by continued selling pressure. The one-day market rally seen Tuesday was not enough to actively change the overall direction of the market. But with December through April contracts posting $2.50 to $2.80 per cwt gains Tuesday, this may very well reestablish support levels in all nearby contracts. Concern surrounding the potential movement and direction of beef product through the next couple of months will continue to be a major point for all commercial and noncommercial traders. Given strong underlying support in energy and grain markets Wednesday morning, some traders seem to have temporarily moved their attention away from the live cattle complex, as they look to adjust positions in these other commodity markets. Without significant direction through the end of the session, nearby live cattle futures are expected to hover in the current price ranges, with light to moderate losses at closing bell very likely. But it is still important to note that the majority of Tuesday's gains remain intact and could help to rekindle buyer support at the end of the week. Cash cattle trade is starting to slowly develop Wednesday morning with light live cattle trade through the South seen over the last couple of hours. Trade in Kansas and Texas is seen at $123 to $124 per cwt, generally steady to $1 per cwt lower than last week's price levels. It is uncertain at this point if this will be enough trade to set the tone for the week, but the potential for steady to weak price levels is starting to take hold. Limited dressed trade in Nebraska is reported at $200 per cwt. This is $1 per cwt lower than last week's average and could be the target price points for cattle sold the rest of the week. Asking prices on unsold cattle are holding at $125 and higher live basis in the South and $202 and higher dressed. Fed Cattle Exchange Auction results are delayed due to technical difficulties, with prices unavailable for midday livestock comments. If data is released later this afternoon, prices will be listed in the closing comments and also in the DTN Cattle Prices and Trends page.
Wednesday morning's boxed beef prices are lower in active trade, with choice cuts $2.38 lower at $320.51 and selects down $3.64 at $286.98 on a total count of 127 loads. Dow Jones estimated Wednesday's cattle slaughter at 120,000, 1,000 less than a week ago and 1,000 less than year ago levels.
FEEDER CATTLE
Feeder cattle prices have resumed the downward market trend Wednesday as the optimism the previous session was unable to garner significant follow-through support. Although traders tried to hold gains early in the session, the overall lack of buyer interest in nearby and deferred feeder cattle contracts allowed for firm losses to develop at midday. October through January futures are holding triple-digit losses. Although the entirety of Tuesday's gains has not eroded, the inability to change the market direction for more than one session will be viewed as generally bearish for the market. Continued caution surrounding beef values and long-term support in the live cattle market is offsetting tighter long term cattle supply levels. This could continue to add moderate weakness to feeder cattle in the near future, although Monday's lows may be used as long-term support levels, helping to bring much needed stability to feeder cattle prices. The CME Feeder Cattle Index was priced at $154.39 for Sept. 13.
LEAN HOGS
Lean hog futures bounced back Wednesday morning from sharp early week losses. Spot October contracts remain the bright spot of the complex with prices surging $1.55 per cwt, moving near $82 per cwt at midday. The rest of the complex is much less optimistic of aggressive price shifts with prices hovering from 10 to 25 cent gains through early summer 2022. Traders remain concerned about overall industry growth through the end of the year and first quarter of 2022. With demand expected to remain steady to firm, the question about how to move the excess pork will continue to put the brakes on active buyer support. December lean hog futures are currently trading at a $9.50 per cwt discount to the spot October contracts. This is not only expected to impact interest from futures traders but will also likely have a significant impact to both cash hog and pork values through the end of the year. Pork cutout prices held limited gains despite a strong pullback in rib cuts Wednesday morning. Wide price volatility in most primal cuts could lead to uneven price shifts in the near future. Cutouts are up $0.41 at $105.61 Wednesday morning on 202.86 loads. Negotiated hog prices are $0.59 lower per cwt with a weighted average price of $83.52 per cwt on 6,755 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $92.40 per cwt. Dow Jones estimated Wednesday's hog slaughter at 477,000, 3,000 less than week ago, while 7,000 less than year ago levels. The CME Lean Hog Index is estimated at $95.35 for Sept. 14.
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