GENERAL COMMENTS:
It was a wild day for the cattle complex as trades threw their guts at the contracts and continued to drive the contracts higher through closing. Still, very little cash cattle trade has developed, and it looks like we are going to have to wait and see what develops on Friday to find the market's trend. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.65 with a weighted average price of $78.44, ranging from $75.00 to $80.00 on 3,148 head. December corn is down 1 3/4 cents per bushel and December soybean meal is up $4.60. The Dow Jones Industrial Average is up 354.49 points.
LIVE CATTLE:
Yet again the live cattle contracts rallied, and the spot October contract was able to capture yet another new contract high. Traders continue to push the contracts to greater and higher price points as the cattle market's focus seems to be on one thing and one thing only -- tight supplies. Even though beef demand is slow right now, demand should pick up by the fourth quarter of 2023 and carry into 2024. Still, no substantial cash cattle trade has developed as feedlots are emboldened to push packers given the strength of the futures complex. Bids of $185 live and $290 dressed have been offered in the North, but no one seems too anxious to sell just yet. October live cattle closed $2.32 higher at $185.47, December live cattle closed $2.50 higher at $190.35 and February live cattle closed $2.60 higher at $194.97. Thursday's slaughter is estimated at 124,000 head, 2,000 head less than a week ago and 3,000 head less than a year ago.
Beef net sales of 6,200 mt for 2023 were down 48% from the previous week and 56% from the prior four-week average. The three largest buyers were China (2,000 mt), Mexico (1,300 mt) and Japan (600 mt).
Thursday's slaughter data shared that, for the week ending Sept. 2, steers averaged 908 pounds, which is 2 pounds heavier than the previous week and 4 pounds heavier than a year ago. During the same week, heifers averaged 822 pounds, which is 3 pounds more than the previous week but still 2 pounds lighter than a year ago.
Boxed beef prices closed lower: choice down $1.18 ($306.37) and select down $0.33 ($286.86) with a movement of 131 loads (89.37 loads of choice, 29.52 loads of select, zero loads of trim and 12.44 loads of ground beef).
FRIDAY'S CATTLE CALL: Higher. Given what the board was able to accomplish Thursday, feedlots stand an excellent chance at pushing prices at least $1.00 higher, if not even a little more.
FEEDER CATTLE:
Thursday's market was a near perfect environment for the feeder cattle complex as the market grew stronger and stronger throughout the day and was able to close anywhere from $1.00 to $4.00 higher. The market's deferred contracts again saw the biggest gains as traders are aware of the fact that feeder cattle supplies in 2024 are going to be even thinner than what they are currently. It's amazing to glance over the deferred contracts of 2024 and see prices ranging from anywhere $270.32 (April 2024 contract) to $279.42 (August 2024 contract). Besides the market's long-term positive outlook of thin cattle supplies, the fact that that corn prices continue to trade lower and that fat cattle have yet to trade this week all helped encourage traders to run the contracts sharply higher through Thursday's end. September feeders closed $1.67 higher at $255.17, October feeders closed $2.82 higher at $261.87 and November feeders closed $3.27 higher at $264.85. The CME Feeder Cattle Index for Sept. 13: up $0.05, $251.21.
LEAN HOGS:
The lean hog complex trailed lower throughout Thursday's trade as the market seems to be technically exhausted. October lean hogs closed $0.62 lower at $83.35, December lean hogs closed $1.25 lower at $75.10 and February lean hogs closed $1.15 lower at $79.02. Pork cutout values were able to close mildly higher, which is commendable given that the rib sank $9.84 lower, but the $6.69 gain in the belly mixed with the $1.83 gain in the picnic was enough positive movement to keep the carcass price slightly higher. Pork cutouts totaled 298.76 loads with 263.42 loads of pork cuts and 35.34 loads of trim. Pork cutout values: up $0.87, $99.09. Thursday's slaughter is estimated at 484,000 head, 24,000 head more than a week ago and 2,000 head more than a year ago. The CME Lean Hog Index for Sept. 12: up $0.35, $86.48.
Pork net sales of 23,100 mt for 2023 were down 12% from the previous week and 26% from the prior four-week average. The three largest buyers were Mexico (6,300 mt), Canada (4,500 mt) and Japan (4,200 mt).
FRIDAY'S HOG CALL: Lower. It's likely that packers won't pay much attention to the cash hog market on Friday as they've already procured their needs for the week.
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