GENERAL COMMENTS:
Live cattle and lean hog futures are holding narrowly mixed price moves Friday morning as traders seem to be moving past the extreme market volatility seen during late September. End-of-week position shifts are seen, but this is likely to do very little to affect the dramatic change in direction livestock markets have taken over the last two weeks. Feeder cattle futures are showing the most support of any livestock markets, but even these moderate, late-week gains are a drop in the bucket to the $17 per cwt loss seen in the last six weeks. December corn is up 5 1/2 cents per bushel following the crop report and December soybean meal is down $0.20 per ton. The Dow Jones Industrial Average is up 228 points with Nasdaq up 6 points.
LIVE CATTLE:
Live cattle futures are trading in a narrowly mixed range with nearby contracts hovering from 17 cents lower to 20 cents higher. Deferred summer 2022 contract months are showing slightly higher gains based on traders covering previous losses from earlier in the week. The concern that live cattle futures are trading at four- to five-month lows heading into the fourth quarter is creating uncertainty in the market. Overall beef demand is still expected to remain strong through both the end of 2021 and well into 2022, creating the current price levels expected to be at a significant discount. Over the last three months, the relationship between cattle and beef markets has been strained to say the least, with markets having little to do with each other. This is not expected to quickly change, which may keep live cattle markets in both futures and cash trade extremely discounted in relation to beef prices. Even though nearby live cattle futures remain "oversold" given the price retraction in the last six weeks, there is no indication yet that significant reentering has started to develop by either commercial or noncommercial traders. Cash cattle prices for the week are generally steady with last week's weighted average prices at $124 live in the South and $196 dressed in the North. But we will have to wait for weekly totals and prices Monday to get a better indication just how close average prices compared, week-to -eek.
Friday morning's boxed beef prices are lower in moderate trade with choice cuts $2.28 lower at $292.70 and selects down $4.63 at $264.69 on a total of 66 loads. Dow Jones estimated Friday's cattle slaughter at 116,000 -- steady with a week ago and 2,000 less than year-ago levels. Saturday runs are expected at 53,000 head.
FEEDER CATTLE:
Light to moderate buyer support has moved into feeder cattle trade on Oct. 1 as traders clearly are looking for a change in market activity and likely price direction following a bearish September. Nearby contracts are holding gains of 60 to 80 cents per cwt, but the Friday moves are likely to be little more than position adjustments and short-covering. It will take a consistent string of upward movement in the feeder and live cattle markets over the next several days to rekindle firm market support in the complex. With September contracts expiring Thursday, October contracts recorded a weekly loss thus far of $3 per cwt. It is also interesting to note that premiums have been taken out of November contracts with a current price spread of 20 cents per cwt seen between October and November futures prices. Firm gains are expected to continue to hold through the rest of the session, but the real test of market direction will likely be seen early next week. The CME Feeder Index was priced at $153.78 for Sept. 29.
LEAN HOGS:
Limited trade volume and price movement is seen in lean hog futures Friday morning as traders appear to be taking a break following the aggressive market rally through the end of September. With traders still expecting additional market firmness during early October, markets seem to be holding most of the gains seen Thursday, unlike outside markets which are generally reversing a portion of the month-end trade seen Thursday. October futures are leading the complex higher as traders start to adjust to potential firmness in cash hog values over the upcoming days and weeks. Even though December and February futures are trading slightly lower, $0.02 to $0.12 lower, respectively, this will do essentially nothing to change the bullish market trend seen in these nearby contracts which have surged $13 per cwt in the last week and a half. Moderate price gains developed in wholesale pork values with individual primal cuts showing moderate support Friday morning. Cutouts are up $1.49 at $117.78 Friday morning on 239.43 loads. Negotiated hog prices are $0.05 lower at $73.56 per cwt on 4,533 head. The swine/pork market formula price is listed at $94.59 per cwt. Dow Jones estimated Friday's hog slaughter at 473,000 -- 1,000 higher than a week ago and 6,000 more than year ago levels. Estimated Saturday slaughter is expected at 170,000 head. The CME Lean Hog Index is unavailable due to packer submission issues for Sept. 30.
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