GENERAL COMMENTS:
Tuesday's commodities are mixed, taking advantage of a temporary pause in the U.S. dollar. November feeder cattle are lower, pressured by Tuesday's higher corn price. December cattle and December hogs tried to start higher but are now extending Monday's new lows. December corn is trading up 6 cents and December soybean meal is up $2.70. The Dow Jones Industrial Average is trading down 157 points as the Fed promises more rate hikes ahead.
LIVE CATTLE:
December cattle are trading down $0.65 at $146.70 at midday Tuesday, leaning lower again after a cautious higher start. Outside market concerns continue to weigh heavy on commodity prices, including cattle with concerns that a slower economy will hurt beef demand at the retail counter. Last week's unweighted average for live steers came in at $145.09 Monday, up $1.45 from the previous week. The unweighted average for dressed steers was $228.90, up $2.04 from the previous week. 116,546 of negotiated volume last week was an encouraging indication of packer demand, but this market remains spooked by outside market concerns and is vulnerable to more noncommercial selling. Friday's CFTC data showed noncommercials holding 120,432 long contracts of live cattle as of September 20, 2022, the most since February.
The overall slaughter pace so far in 2022 is running up 1.5% from a year ago and was steady at 667,000 last week. Dow Jones estimated Tuesday's cattle slaughter at 127,000, an active pace and the same as last week. Tuesday morning's choice boxed beef prices were up $1.07 at $248.91, while selects were down $1.27 at $222.08 with a total load count of 90. Choice boxed beef is near its lowest prices in a year and a half, curiously low for an economy in the midst of an inflation problem.
FEEDER CATTLE:
November feeder cattle are trading down $1.55 at $175.50, pressured again by concerns of slower economic growth ahead and by December corn trading 5 cents higher Tuesday morning. Technically, November feeder cattle broke below their 100-day average one week ago and prices have slid lower since as it's difficult to pencil out a positive return for feeders when the future of retail beef demand is not looking good. For the November contract, the May low near $171 may offer support, depending on how retail demand weathers the current storm. The CME Feeder Cattle Index ended at $178.71 Friday, tracking near the September price.
LEAN HOGS:
December lean hogs are trading down $2.95 at $76.45, extending Monday's new seven-month low. Tuesday morning's carcass value of $102.07 is 61 cents higher, but still near its lowest prices since January. The lower prices should actually serve pork well at the retail counter and help the slaughter pace stay active, even if the economy slows moving forward. Thursday afternoon's Hogs and Pigs report from USDA will get traders interest and offer some direction on where inventories currently stand. Private estimates are looking for Sept. 1 hog inventory to be down roughly 1.6% from a year ago, a generally supportive outlook for hog prices in an economy with difficult challenges ahead. Tuesday morning's Daily Direct Hog report showed the swine formula base down to $93.76. Negotiated hogs had no morning update and were last seen at $91.88 Monday afternoon. USDA expects pork production to increase 8.6% in the fourth quarter, but it is difficult to see how that will happen without increased inventory. Technically, Monday's new seven-month low was a bearish break in prices that should lead to more noncommercial selling. Friday's CFTC report showed noncommercials holding 89,178 contracts long as of Sept. 20, a big position to hang on to when prices are extending new lows.
No comments:
Post a Comment