GENERAL COMMENTS:
Active market shifts have developed in livestock futures early Monday morning as traders seem to be quickly distancing themselves from the late-September market turmoil seen last week. Live cattle futures are leading the way higher with December contracts $2.50 per cwt higher at $127.77 per cwt at midday. Although this market move is far from erasing the bearish market slide seen over the last few weeks, if this move higher holds, it would help to establish long-term support levels on which traders can build upon over the next few days and weeks. Nearby feeder cattle trade is gaining limited support based on live cattle gains, but trade volume remains sluggish at best. Triple-digit losses have developed in the lean hog complex as traders are trying to find a happy medium following the market surge last week. This could add further widespread losses as traders still struggle to determine what long-term pork demand will look like through the upcoming months. December corn is up 1 1/2 cents per bushel following the crop report and December soybean meal is down $2.50 per ton. The Dow Jones Industrial Average is down 345 points with Nasdaq down 327 points.
LIVE CATTLE:
Live cattle futures have seen significant market support Monday morning with triple-digit gains in all nearby contracts; futures are bouncing off what could be long-term support levels set last week. The tone of the market seems to have changed as volume is increasing. Even though uncertainty remains about the direction of beef values and long-term demand for beef given larger-than-expected cattle numbers in the system, there is no denying recent losses have left the complex extremely oversold. This could help drive some limited to moderate support back to the complex. The ability to hold these gains through the end of the session and over the next couple of trading sessions will go a long way in enticing additional trade interest to reenter the market. Cash cattle markets remain at a standstill Monday morning with asking prices and bids still undeveloped. More interest likely will be seen Tuesday and Wednesday. The strong upward support in futures trade Monday morning should firm feedlot managers' resolve as they look to change the direction of cash cattle markets during early October. Most trade will likely be delayed until the second half of the week, but the trend over the last month to start trade Wednesday could continue. Showlists Monday morning are mixed, lower in Texas and Nebraska but larger in Kansas.
Monday morning's boxed beef prices are mixed in extremely light trade with Choice cuts $2.51 lower at $289.85 and Selects up $0.97 at $265.81 on a total count of 38 loads. Dow Jones estimated Monday's cattle slaughter at 120,000 -- steady with a week ago and 4,000 more than year ago levels.
FEEDER CATTLE:
As stated late last week, the real test of market direction would likely be seen early in the week. It appears this is taking place as buyers have moved into live and feeder cattle futures during the morning. With remaining 2021 contracts posting gains of $2 per cwt or higher and triple-digit support seen in spring contracts, buyers are trying to offset a portion of the bearish market shift seen during September. Although nearby feeder cattle futures have moved back to near $155 per cwt, prices still remain in the low end of the trading range, likely paving the way for additional support in the coming days and weeks. Given upcoming feeder cattle sales runs over the next few weeks, and expectations that cattle supplies will continue to outpace year-ago levels through the end of the year, could very likely keep prices between the $156 and $160 per cwt over the near future. But establishing strong support levels at or above $152 per cwt will be critical in enticing additional buyer interest back into the market. The CME Feeder Index was priced at $153.72 for Sept. 30.
LEAN HOGS:
The talk last week about a possible market correction coming seems to have happened Monday morning with nearby contracts holding triple-digit losses, while December contracts are leading the downward market shift with a $2.20 per cwt loss. Given a $12 per cwt market rally in nearby contracts over the last two weeks, the entire nearby lean hog complex has gone from oversold to extremely overbought with traders still not having a good indication of how fundamental market moves will catch up to the adjustment in futures trade. Last week's highs may easily establish an upper range for trade over the next couple of months, although the realization that tighter hog supplies may be around through most of 2022 is likely to keep firm support relatively close. Sharp gains developed in wholesale pork values with aggressive price support seen in ham and belly cuts. Cutouts are up $6.46 at $119.85 Monday morning on 142.82 loads. Negotiated hog prices are $1.29 lower at $72.27 per cwt on 3,519 head. The swine/pork market formula price is listed at $95.00 per cwt. Dow Jones estimated Monday's hog slaughter at 473,000 -- 2,000 lower than a week ago and 11,000 less than year ago levels. The CME Lean Hog Index is listed at $94.05 per cwt for Oct. 1.
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