GENERAL COMMENTS:
It was a strong Monday for the livestock complex as all three of the markets were able to close higher, but it was the feeder cattle complex that saw the biggest gains. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $2.30 with a weighted average price of $86.92 on 1,771 head. December corn is up 8 1/4 cents per bushel and December soybean meal is up $3.80. The Dow Jones Industrial Average is up 213.08 points.
LIVE CATTLE:
The live cattle complex may not have been as aggressive as the feeder cattle complex was, but it still managed to close higher, which sure beats the alternative. October live cattle closed $0.37 higher at $181.55, December live cattle closed $0.52 higher at $185.65 and February live cattle closed $0.75 higher at $189.95. Beef prices were marked lower throughout the day, but given that it's only Monday, that doesn't mean too much at this point. Traders will, however, keep an eye on boxed prices moving forward as that could affect packers' aggressiveness not only in the cash market but also in terms of processing speeds. Monday's slaughter is estimated at 125,000 head, 3,000 head more than a week ago and 2,000 head more than a year ago. New showlists appear to be mixed, higher in Nebraska/Colorado, but lower in Kansas and Texas.
Last week, Northern cattle began to trade on Thursday, but the majority of the week's trade happened on Friday at $290 to $295, mostly at $292, which is roughly $3.00 lower than the previous week's weighted average. Southern live cattle didn't trade until Friday afternoon and their sales were marked at $178 to mostly $179, which is considered fully steady with the week before. Last week's negotiated cash cattle traded totaled 68,899 head. Of that, 83% (57,184 head) were committed for the nearby delivery, while the remaining 17% (11,715 head) were committed for the deferred delivery.
Boxed beef prices closed lower: choice down $0.86 ($317.04) and select down $0.58 ($292.09) with a movement of 92 loads (45.31 loads of choice, 27.98 loads of select, 5.19 loads of trim and 13.81 loads of ground beef).
TUESDAY'S CATTLE CALL: Steady. Packers weren't able to get a plethora of cattle bought last week, which likely means that they'll need to buy modestly this week, and that should keep prices at least steady.
FEEDER CATTLE:
While looking at the nearby corn contracts that closed $0.07 to $0.08 higher, the feeder cattle market charged through Monday's close and scored new life of the contract highs in most of the nearby contracts. The knowingness that cattle supplies are going to remain thin well through the end of the year seems to be resonating more and more with traders, as they continue to come to terms with the strong fundamental outlook of the market. September feeders closed $3.07 higher at $254.27, October feeders closed $3.05 higher at $257.02 and November feeders closed $2.65 higher at $258.05. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week and at their midsession point, feeder steers were trading $1.00 higher but steers weighing 600 to 700 pounds were trading $4.00 higher and feeder heifers sold mostly $1.00 to $3.00 stronger. Steer and heifer calves were only lightly tested but instances of $10.00 higher was seen on some offerings. Feeder cattle supply over 600 pounds was 56%. The CME Feeder Cattle Index for Aug. 25: $2.24, $247.83.
LEAN HOGS:
The lean hog complex was able to close higher along with the cattle complex as traders have plenty of room to trade higher technically before running into resistance and as a higher close in both cash prices and pork cutout values was a welcomed surprise for the market. October lean hogs closed $2.02 higher at $81.85, December lean hogs closed $1.40 higher at $73.42 and February lean hogs closed $1.07 higher at $77.45. Pork cutout values were extremely volatile last week, and Monday afternoon's higher close was much needed, but traders will continue to monitor pork demand closely. Pork cutouts totaled 264.25 loads with 233.06 loads of pork cuts and 41.19 loads of trim. Pork cutout values: up $2.63, $96.05. Monday's slaughter is estimated at 476,000 head, 5,000 head more than a week ago and 6,000 head less than a year ago. Friday's hog slaughter was revised to 463,000 head, pushing the week's total slaughter to 2,495,000 head. The CME Lean Hog Index for Aug. 24: down $1.22, $95.18.
TUESDAY'S HOG CALL: Steady to somewhat higher. Given that packers were wiling to jump into the market and buy hogs on Monday to the point where prices printed higher, it's likely that they need some more hogs and that prices could be higher on Tuesday as well.
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