GENERAL COMMENTS:
Firm outside market gains Wednesday morning has helped to rekindle buyer support in most livestock trade. Cattle futures are leading the livestock market higher with active support seen in all futures contracts. Although it is still too early to declare a change in direction following early week pressure, the potential that enough liquidation has taken place over the last couple of weeks could help to extend current gains through the upcoming sessions. Hog futures seem to have stabilized, but are still unable to show significant market strength, leaving most contracts steady to lower at midday. December corn is up 5 cents per bushel and December soybean meal is up $0.80 per ton. The Dow Jones Industrial Average is up 442 points with Nasdaq adding 154 points.
LIVE CATTLE
Moderate to active price gains have developed in live cattle trade Wednesday morning as spot October futures are holding 52-cent gains at midday, while slightly more aggressive interest is holding in early 2022 contract months. With most commodity and stock markets moving higher during morning trade, the focus on widespread market shifts is taking priority over fundamental cattle and beef market moves. In a wider scope, traders seem to be moving past China property development issues for the time being and now turning the focus to the afternoon federal reserve meeting. Potential longer-term shifts in financial support of the economy is the main interest ahead of the meeting briefing. The ability to hang onto early gains in nearby live cattle futures could help spark more active gains through the end of the week. Cattle traders are also starting to focus on Friday's cattle on feed report. Pre-report estimates are pointing to total on feed numbers at 98.1% 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. With the current estimate indicating that seasonal lows may have already been seen in the August report. Cash cattle trade has taken an unusual turn Wednesday morning with light trade seen in several areas right away Wednesday. Although trade remains light, the ability to spark interest this early has gained the attention of feeders. Live cash cattle trade in the South is seen at $123 to $124 per cwt, mostly $124 per cwt. This is generally steady with last week's average and could set up further trade at current price ranges. Northern dressed trade in Nebraska is reported at $198 per cwt, $1 per cwt lower than last week's average. More cattle are expected to still be traded over the next couple of days. Reported delivery schedules for cattle sold Wednesday morning are in the first two weeks of October, indicating that packers continue to be well positioned for immediate needs. The Fed Cattle Exchange Auction today 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.
Tuesday morning's boxed beef prices are lower in moderate trade, with choice cuts $2.42 lower at $308.95 and selects down $0.41 at $277.60 on a total count of 94 loads. Dow Jones estimated Wednesday's cattle slaughter at 120,000, steady with a week ago, and 1,000 less than year ago levels.
FEEDER CATTLE
Early support in all cattle futures helped spark light to moderate support across feeder cattle trade. Spot September contracts have dipped lower late Wednesday morning as traders have moved the focus of nearby contracts to the morning rally in grain trade. Higher corn and soybean costs point to increased production costs. Given the volatility in the market, these moves have a larger impact on nearby contracts rather than deferred futures. Summer 2022 contracts are holding firm gains with April and May contracts posting $1 gains at midday. The ability to sustain morning support through the end of the session could help to spark follow-through interest in all contract months. The CME Feeder Cattle Index was priced at $153.77 for Sept. 20.
LEAN HOGS
Widespread outside market support developing in most other commodity markets, and stock markets seem to have only limited interest in lean hog trade with prices mixed within a narrow trading range midmorning. Hog futures have continued to bounce higher and lower through the morning with traders unable to find significant buyer support in order to break away from the market slide seen early in the week. October futures are leading the complex lower with a 27-cent per cwt loss. Although losses are small compared to pressure seen over the last two days, the inability to instill buyer support through the complex continues to focus on concerns of further losses in the near future. February through May contracts are holding narrow gains, limiting further bearishness from sweeping through the complex. Cutouts are up $3.93 at $106.69 Wednesday morning on 186.85 loads. Negotiated hog prices are unreported at this time due to confidentiality. Dow Jones estimated Wednesday's hog slaughter at 477,000, steady with a week ago, while 8,000 less than year ago levels. The CME Lean Hog Index is estimated at $92.65 for Sept. 21.
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