GENERAL COMMENTS:
The long weekend was apparently just what the livestock complex needed as the market closed fully higher by Tuesday's end. The cash cattle market didn't see any trade develop but come Wednesday demand is expected to be greater and prices could be higher as well. Hog prices closed $0.62 higher on the Daily Direct Afternoon Hog Report, with a weighted average of $98.30 on 11,010 head. December corn is up 10 1/4 cents per bushel and December soybean meal is down $10.90. The Dow Jones Industrial Average is down 173.14 points.
LIVE CATTLE:
The live cattle market closed higher, seeing strong support for its market as traders came back from the long weekend seemingly ready to reignite the cattle market's rally. The combination of higher boxed beef prices and higher trade throughout the futures complex lays a strong tone across the market and will likely help feedlots get at least steady prices this week, if not even $1.00 or $2.00 more. The cash cattle market didn't see any business develop throughout Tuesday's trade, which will likely lead into an aggressive buying day come Wednesday. Substantially higher corn prices could rock the cattle market's morale, but given the descend that the contracts endured over the last two weeks, the live cattle complex is free from any immediate resistance pressure. October live cattle closed $0.50 higher at $145.05, December live cattle closed $0.62 higher at $150.87 and February live cattle closed $0.82 higher at $155.20.
Tuesday's slaughter is estimated at 127,000 head, 1,000 head more than a week ago and 8,000 head more than a year ago. Monday's slaughter is estimated at 3,000 head.
Last week's negotiated cash cattle trade totaled 75,260 head. Of that, 68% (51,280 head) were committed for the nearby delivery, while the remaining 32% (23,980 head) were committed for the deferred delivery.
Boxed beef prices closed higher: choice up $1.05 ($260.47) and select up $0.72 ($239.30) with a movement of 125 loads (57.85 loads of choice, 29.55 loads of select, 19.84 loads of trim and 17.92 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady to $2.00 higher. Given that packers have been lackadaisical in their buying over the last two weeks, it likely means that they'll need to be more aggressive this week in order to secure enough product for upcoming kills.
FEEDER CATTLE:
Even with the corn complex closing $0.10 to $0.11 higher, that didn't seem to put a damper on the momentum that drove feeder cattle prices higher. September feeder cattle closed $0.30 higher at $184.17, October feeders closed $1.15 higher at $186.10 and November feeders closed $0.77 higher at $187.02. The combination of higher feeder cattle prices and higher trade seen throughout the live cattle complex was a dream for cattlemen to witness early this week. Before the long Labor Day weekend, the market struggled to trade higher as traders become complacent, but now that the market is back to a normal schedule and all can focus on the long-term realities of the market, higher tones are again noted. At OKC West Livestock Auction in El Reno, Oklahoma, at their midsession point and when compared to last week, steer calves were selling $3.00 to $5.00 higher on a light test, and although heifer calves were not well tested, a lower undertone was noted. Feeder cattle supply over 600 pounds was 10%. The CME Feeder Cattle Index for Sept. 2: down $2.29, $178.96.
LEAN HOGS:
Despite there being underlying concerns in the lean hog complex (pork demand, packer interest) Tuesday treated the lean hog market well as the marketplace closed fully higher. October lean hogs closed $1.07 higher at $91.10, December lean hogs closed $0.80 higher at $83.50 and February lean hogs closed $0.37 higher at $87.07. Packer demand was better this afternoon as there was right over 11,000 head traded and prices closed $0.62 higher. Packers have a balancing act to closely watch right now as they need to keep enough hogs on the books to ensure enough product for upcoming kills, but they can't afford to over buy right now, given how thin their own margins are. Nevertheless, it's going to be incredibly important to continue to watch both pork cutout values and processing speeds as they could indicate whether or not packers are going to be more or less aggressive in the days ahead. Pork cutouts are unavailable at this time. Tuesday's slaughter is estimated at 483,000 head, 3,000 head more than a week ago and 12,000 head more than a year ago. Monday's slaughter is estimated at 2,000 head. The CME Lean Hog Index for Sept. 1: down $1.52, $104.74.
WEDNESDAY'S CASH HOG CALL: Steady to somewhat higher. Given that packers were so lackadaisical in last week's market likely means that they'll have to be more aggressive this week, but given how thin their margins are, the cash hog market won't see wildly higher prices.
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