GENERAL COMMENTS:
After a lousy start to the week on Monday, the livestock complex had a change of pace Tuesday as the corn market traded lower alleviating pressure for the cattle complex, and as the lean hog market continued to rally on technical support. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $2.52 with a weighted average of $106.83 on 7,286 head. December corn is down 5 3/4 cents per bushel and December soybean meal is down $2.60. The Dow Jones Industrial Average is down 361.95 points.
LIVE CATTLE:
The live cattle market closed higher, rallying off Monday's low and showing that the market doesn't want to trade below it's 40-day moving average if possible. October live cattle closed $0.92 higher at $143.82, December live cattle closed $0.87 higher at $149.80 and February live cattle closed $0.70 higher at $154.35. Right on the heels of last week's impressive slaughter of 678,000 head, the market can put another feather in its hat as the most recent USDA grading data shared that the nation's choice-plus grading percentage fell below the industry's five-year average, which marks a new low for 2022. As packers run fast chain speeds, fed cattle are being pulled ahead of schedule, which is obviously affecting grading percentages. Nevertheless, the deeper the market works its way into 2022, the thinner the supply of fat cattle there's expected to be. October live cattle closed $0.92 higher at $143.82, December live cattle closed $0.87 higher at $149.80 and February live cattle closed $0.70 higher at $154.35. The cash cattle market didn't see much interest throughout the day, meaning that Wednesday's market should start to see some interest from packers. Asking prices are noted at $144 in the South while Northern asking prices are still illusive.
Tuesday's slaughter is estimated at 126,000 head, steady with a week ago and 6,000 head more than a year ago.
Boxed beef prices closed lower: choice down $3.25 ($259.79) and select down $3.07 ($239.68) with a movement of 162 loads (94.75 loads of choice, 30.60 loads of select, 12.25 loads of trim and 24.78 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. It's a tough call as to what packers are going to do this week, but given how fast chain speeds are running, I tend to bet that the cash market will be able to hold prices steady this week.
FEEDER CATTLE:
The corn market closed $0.04 to $0.05 lower in its nearby contracts, which was enough for the feeder cattle complex to shoot higher. September feeders closed $2.25 higher at $182.17, October feeders closed $2.20 higher at $183.27 and November feeders closed $1.80 higher at $184.70. The tricky thing about the corn market right now is that, until harvest is completely finished, the feeder cattle market is subject to any and all pressure from the grain sector. The more upside that the live cattle market can make during this time will only help feeders because buyers need to see that their high cost of gains aren't going to be a wash on the backside when they go to sell these feeders as fats. Nevertheless, until this corn crop is harvested, expect some volatility in the feeder cattle arena. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week, feeder steers and steer calves traded unevenly steady and feeder heifers and heifer calves traded steady to $4.00 lower. Feeder cattle supply over 600 pounds was 53%. The CME Feeder Cattle Index for Aug. 29: down $0.16, $183.00.
LEAN HOGS:
The lean hog complex charged higher throughout Tuesday's trade, showing it believes that, after the market's steep regression two weeks ago, there's upside now to be had. Demand will be the market's biggest driver through the later part of the third and fourth quarters of 2022. It's innately important that domestic consumer demand does not waver given that U.S. pork is higher prices than other competitors, and from there any export opportunities that the market wins is just gravy (or should I specify, ham gravy)! October lean hogs closed $1.35 higher at $93.60, December lean hogs closed $0.90 higher at $85.50 and February lean hogs closed $0.70 higher at $88.62. Pork cutouts totaled 355.38 loads with 327.34 loads of pork cuts and 28.04 loads of trim. Pork cutout values: down $0.41, $102.16. Tuesday's slaughter is estimated at 480,000 head, steady with a week ago and 3,000 head more than a year ago. The CME Lean Hog Index for Aug. 26: down $2.06, $111.26.
WEDNESDAY'S CASH HOG CALL: Higher. Given that the market didn't see much interest throughout Tuesday's trade likely means that Wednesday's market is going to see the bulk of this week's business develop throughout its hours. Higher prices and a much bigger volume is expected.
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