GENERAL COMMENTS:
It was a brutal day for the markets as the nation's Consumer Price Index summary shared worse news than what was expected as inflation has jumped to 8.3%. Needless to say, the live cattle and feeder cattle markets crumbled at this news. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $9.98 with a weighted average of $99.41 on 5,895 head. December corn is down 3 1/4 cents per bushel and December soybean meal is down $10.80. The Dow Jones Industrial Average is down 1,276.37 points.
LIVE CATTLE:
Cattlemen and consumers alike were both disgruntled with Tuesday's inflation announcement and both the live cattle and feeder cattle markets crumbled because of it. October live cattle closed $0.95 lower at $144.80, December live cattle closed $0.90 lower at $150.45 and February live cattle closed $0.82 lower at $154.72. Feedlots have their hopes set for higher prices and even though inflation chatter swarmed Tuesday's market, the fact that packers are running aggressive slaughter speeds and in need of cattle hasn't change. The big question heading into Wednesday's trade is: Will feedlots focus on the market's fundamentals (current showlists, fast processing speeds, waning Choice/Prime grading percentage) or become burdened with the markets outside pressures and sell cattle cheaper? Time will tell. Bids were offered in parts of Kansas at $140 to $141 but no one jumped on them. Asking prices remain firm in the South at $143 to $145 and the North has yet to share their early asking prices.
Tuesday's slaughter is estimated at 128,000 head, 1,000 head more than a week ago and 8,000 head more than a year ago.
Boxed beef prices closed lower: choice down $2.28 ($256.66) and select down $2.18 ($233.58) with a movement of 172 loads (88.18 loads of choice, 31.63 loads of select, 18.86 loads of trim and 33.81 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. Given that Tuesday's market was overcome with inflation chatter, the fact that packers need cattle hasn't changed.
FEEDER CATTLE:
The day's announcement of inflation reaching a whopping 8.3% cratered the feeder cattle market as it dropped anywhere from 110 to 260 points. On a normal day, the fact that the corn market closed lower would have helped the feeder cattle market, but given that there was so much pressure looming over Americans and our economy, the corn market's weakness didn't lend much support to feeders' pleading case. September feeders closed $2.07 lower at $179.45, October feeders closed $2.60 lower at $180.52 and November feeders closed $2.45 lower at $182.35. At Tulsa Livestock Auction in Tulsa, Oklahoma, compared to two weeks ago, steers traded $6.00 to $8.00 higher, heifers traded $4.00 to $7.00 higher, Slaughter cows traded $4.00 to $6.00 lower and slaughter bulls sold $10.00 lower. Feeder cattle supply over 600 pounds was 19%. The CME Feeder Cattle Index for Sept. 12: down $85, $180.06.
LEAN HOGS:
While the rest of the marketplace imploded, the lean hog complex used Tuesday's trade as an opportunity to rally. October lean hogs closed $3.87 higher at $95.75, December lean hogs closed $2.92 higher at $85.70 and February lean hogs closed $2.47 higher at $89.67. Not only did the futures market see improvement but also the nearly forgotten about cash hog market. Cash hog prices closed nearly $10.00 higher, and even though it was on a thin movement, it's safe to say that at least one packer was caught being short-bought for an upcoming kill, given that they were able to support the market as aggressively as they did when pork cutout values aren't lending support. Pork cutouts totaled 356.96 loads with 302.53 loads of pork cuts and 54.43 loads of trim. Pork cutout values: down $1.01, $104.70. Tuesday's slaughter is estimated at 476,000 head, 7,000 head less than a week ago and 5,000 head less than a year ago. Monday's slaughter was revised to 475,000 head. The CME Lean Hog Index for Sept. 9: down $1.28, $98.29.
WEDNESDAY'S CASH HOG CALL: Lower. Even though cash prices were higher on Tuesday, its unlikely that prices will be higher on Wednesday as packers didn't see improvement in pork cutout values.
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