Wednesday Closing Livestock Market Update - Traders Continue to Handle Livestock Complex Cautiously

GENERAL COMMENTS:

The livestock complex closed mostly lower Wednesday afternoon as traders continue to be cautious players in this week's market. Some cash cattle trade was reported in the South at $179 which is about $1.00 lower than last week's weighted averages. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.72 with a weighted average price of $93.45 on 10,247 head. December corn is up 6 cents per bushel and December soybean meal is up $2.10. The Dow Jones Industrial Average is down 180.65 points.

LIVE CATTLE:

The live cattle complex drifted lower through the day's end as the market seemed unsettled with the slight uptick in corn prices and the slightly lower prices for Southern cash cattle. A light round of trade was reported throughout the day in Texas and Kansas where packers got cattle bought for $179 which is roughly $1.00 lower than last week's weighted average. Bids of $185 live and $294 to $295 dressed were offered in Nebraska, but thus far, feedlots have passed on those offers. Asking prices in the South are noted at $181 to $182 but are still not posted in the North. More cattle will need to trade this week, and packers will try to use the skeptical nature of the market given that it's a Cattle on Feed report week to try to work prices lower. August live cattle closed $0.32 lower at $178.77, October live cattle closed $0.70 lower at $179.27 and December live cattle closed $0.60 lower at $183.57. 

Wednesday's slaughter is estimated at 123,000 head, 1,000 head more than a week ago and 4,000 head less than a year ago.

Boxed beef prices closed higher: choice up $1.73 ($308.99) and select up $1.74 ($284.77) with a movement of 118 loads (59.67 loads of choice, 31.89 loads of select, 10.52 loads of trim and 15.57 loads of ground beef).

THURSDAY'S CATTLE CALL: Steady. The South may have traded some cattle for $1.00 lower, but the North seems committed to letting time pass by to ensure that prices hold at least steady.

FEEDER CATTLE:

The combination of higher corn prices and a slightly softer tone in the cash cattle market was just enough bearishness to keep traders trading the feeder cattle contracts lower. August feeders closed $0.50 lower at $245.37, September feeders closed $0.77 lower at $249.00 and October feeders closed $0.57 lower at $250.97. Given that a Cattle on Feed report will be released this Friday, a cautious/hesitant tone is likely to remain the feeder cattle market's theme throughout the week until cattlemen and traders alike see where placements land. Given that the last two reports have shown greater year-over-year placements, one would logically be led to assume that this month's placements should be lower given that this year's calf crop is smaller, but feeder cattle imports from Mexico have been robustly higher. At Witner Livestock Auction in Dodge City, Kansas, compared to last week, feeder steers weighing 700 to 950 pounds sold steady. There weren't enough steer calves for a market test, but a higher trend was noted. Feeder heifers weighing 650 to 850 pounds sold steady to $4.00 higher. There weren't enough heifer calves sold to establish a market trend but again a higher trend was noted. Slaughter cows sold $3.00 to $5.00 higher and slaughter bulls sold steady. The CME Feeder Cattle Index for Aug. 15: down $0.30, $244.94.

LEAN HOGS:

The lean hog complex kept its red position through closing, although traders didn't push the market lower as aggressively as they had earlier this week. October lean hogs closed $0.02 lower at $78.17, December lean hogs closed $0.07 lower at $71.17 and February lean hogs closed $0.30 lower at $75.57. The combination of cheaper cash prices and cheaper pork cutout values didn't help either. Like I said in Wednesday's midday comments, the lean hog complex is desperately looking for support from its fundamentals and unfortunately that support just doesn't seem to be coming to fruition. Pork cutouts totaled 254.28 loads with 218.84 loads of pork cuts and 35.43 loads of trim. Pork cutout values: down $1.36, $107.27. Wednesday's slaughter is estimated at 471,000 head, 3,000 head more than a week ago and 11,000 head less than a year ago. The CME Lean Hog Index for Aug. 14: down $0.64, $101.93.

THURSDAY'S HOG CALL: Steady to somewhat lower. With demand being hit and miss again this week, it's unlikely that packers are going to be willing to advance cash prices.