Wednesday Morning Livestock Market Update - Support Remains Elusive

GENERAL COMMENTS:

Both live and feeder cattle closed the chart gaps that were left from the strong opening Monday. The Cattle on Feed report is history and has had no impact on the market as futures have erased any gains that were realized from the report. Traders really have little else to trade on with only the strength of boxed beef being something positive. However, much of the reason for that is likely due to slower slaughter speeds and not a surge in demand. Boxed beef was higher yesterday with choice up $1.49 and select up $2.18. There is no indication of cash so far as no bids or offers have been revealed. There is a growing concern that feedlots might be willing to let cattle go at $1.00 lower again this week. Packers were able to set cattle for deferred delivery last week possibly keeping them less aggressive during the hot weather.

Hogs dropped as temperatures rose. Packers seem to not be willing to purchase hogs during the hot weather. The National Direct Afternoon Hog report showed a decline of $1.90 to a weighted average of $89.75. Both cash and cutouts have been in a sort of freefall over the past few weeks reducing prices significantly. Cutouts dropped $1.56 yesterday as the weakness continues. Both lower cash and cutouts may put further pressure on the market today. Prices should be nearing a level at which it would be attractive for buyers to support the market and consumer demand would improve.

	BULL SIDE		BEAR SIDE
1)	The current and coming tightness of cattle supplies should limit the futures price retracement. Fundamentals remain supportive.	1)	Cattle have not been able to find support after the friendly Cattle on Feed report. Cash may be struggling a bit as packers limit slaughter to improve margins.
2)	The remaining chart gaps from Monday were closed, leaving futures in a better position with technical support not much lower.	2)	Cattle futures are nearing technical support. A break below that level could trigger long liquidation.
3)	The recent lower prices should spur pork demand as beef prices continue to remain high. Food costs have continued to rise.	3)	Higher hog weights and ample supply keeps cash on the defensive. Packers need not be aggressive with their purchases.
4)	December and February hog futures have chart gaps above the market from August 10 that may be filled at some point.	4)	Both cash and cutouts have nearly been in a freefall with lower prices on nearly a daily basis. This leaves the market on the defensive.

Tuesday Closing Livestock Market Update - Dull Tones Dominate Complex

GENERAL COMMENTS:

It was a mundane Tuesday for the livestock complex as market participants watched temperatures rise while nothing developed in the livestock arena. No cash cattle trade was reported throughout the day, but some interest could begin to develop by Wednesday. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.90 with a weighted average price of $89.75 on 3,969 head. December corn is down 3 cents per bushel and December soybean meal is down $1.50. The Dow Jones Industrial Average is down 180.70 points.

LIVE CATTLE:

It was a lackadaisical day for the live cattle complex as traders let time pass by without overly exerting themselves in the marketplace. As temperatures rise this week and we're again reminded that we are currently working our way through the dog days of summer, feedlots and packers will continue to engage in what feels like a weekly battle, as both parties want different outcomes in the cash market. Packers have reduced slaughter speeds as a way to pump the brakes on the cash market but, as of right now, feedlots remain current enough in their showlists that they're able to fight for steady prices. No cash cattle trade developed throughout Tuesday's market and it's likely that we won't see any trade until late Wednesday or potentially even later in the week. Bids and asking prices remain elusive at this point. October live cattle closed $1.25 lower at $178.62, December live cattle closed $1.15 lower at $183.15 and February live cattle closed $0.95 lower at $187.30. 

Tuesday's slaughter is estimated at 124,000 head, 1,000 head less than a week ago and 3,000 head less than a year ago.

Boxed beef prices closed higher: choice up $1.49 ($317.05) and select up $2.18 ($289.51) with a movement of 96 loads (51.30 loads of choice, 15.79 loads of select, 15.48 loads of trim and 13.19 loads of ground beef).

WEDNESDAY'S CATTLE CALL: Steady to $1.00 lower. Given that packers were able to get some cattle bought with time last week and were able to work the market about $1.00 lower, their aim this week is going to be the same thing.

FEEDER CATTLE:

The feeder cattle complex closed lower as traders sidelined the market after helping advance the complex Monday. Traders wanted to acknowledge the supportive nature of last Friday's Cattle on Feed report, but as everyone looks to this week and what the market may or may not accomplish, there are some concerns as temperatures are brutally high and it's expected that packers will try to keep cash prices depressed again this week. Thankfully the corn complex isn't adding any additional pressure to the feeder cattle market as cow calf producers patiently wait for the dog days of summer to pass by. September feeders closed $1.32 lower at $249.00, October feeders closed $1.42 lower at $251.22 and November feeders closed $1.25 lower at $252.27. The CME Feeder Cattle Index for Aug. 21: not available at this time.

LEAN HOGS:

The lean hog complex was also pressured to round out the day lower as traders looked for support, but ultimately came up short handed in Tuesday's market. Even though pork cutout values did close lower, it was impressive to see that the day's movement came in at 372.94 loads. October lean hogs closed $1.05 lower at $79.57, December lean hogs closed $1.37 lower at $72.35 and February lean hogs closed $1.47 lower at $76.55. Pork cutouts totaled 372.94 loads with 329.18 loads of pork cuts and 43.75 loads of trim. Pork cutout values: down $1.56, $103.65. Tuesday's slaughter is estimated at 476,000 head, steady with a week ago and 6,000 head less than a year ago. Monday's hog slaughter was revised to 471,000 head. The CME Lean Hog Index for Aug. 18: down $0.80, $98.81.

WEDNESDAY'S HOG CALL: Lower. With demand seeming grim, packers will likely buy a larger volume of hogs on Wednesday, but prices won't likely jump higher.

Tuesday Midday Livestock Market Summary - Traders Look for Fundamental Cues

GENERAL COMMENTS:

Traders threw themselves at the cattle complex on Monday to showcase that they indeed found the Cattle on Feed report supportive, but their supportive gesture hasn't carried into Tuesday's markets as both the live cattle and feeder cattle contracts are trading lower. The lean hog complex is also trading lower as fundamentally traders just aren't seeing the support necessary to merit steady/higher trade. December corn is down 6 3/4 cents per bushel and December soybean meal is down $4.10. The Dow Jones Industrial Average is down 127.74 points.

LIVE CATTLE:

The live cattle complex is trading lower as traders seem to be patiently waiting for this week's market to reveal itself. Traders are continuing to look for signals from the cash market as to which direction it may trade this week and for demand signs from boxed beef prices. No cash cattle trade has developed yet and it's unlikely that we'll see much action in the cash market ahead of Wednesday. Bids and asking prices remain elusive. It is supportive however that boxed beef prices are higher which continues to prove that consumers are hungry, and it could keep packers more engaged in the cash sector as well. October live cattle are down $1.27 at $178.60, December live cattle are down $1.17 at $183.12 and February live cattle are down $0.95 at $187.30.

Boxed beef prices are higher: choice up $1.64 ($317.20) and select up $2.35 ($289.68) and with a movement of 54 loads (27.46 loads of choice, 8.94 loads of select, 10.74 loads of trim and 6.90 loads of ground beef).

FEEDER CATTLE:

The feeder cattle complex has stalled out as traders keep the market merely steady with Monday's close. Thankfully corn prices aren't adding any additional pressure as they continue to trek downward, but traders would like to see continued support in the live cattle/cash cattle markets before they push feeders much higher. September feeders are down $0.77 at $249.55, October feeders are down $0.87 at $251.75 and November feeders are down $0.77 at $252.75.

LEAN HOGS:

The lean hog complex continues to trail lower as traders aren't seeing the fundamental backing needed to maintain Friday's advancement. Neither cash prices nor pork cutout values are higher at noon which is contributing to the market's current weakness. October lean hogs are down $0.72 at $79.90, December lean hogs are down $1.35 at $72.37 and February lean hogs are down $1.22 at $76.80.

The projected lean hog index for 8/21/2023 is down $0.77 at $98.04, and the actual index for 8/18/2023 is down $0.80 at $98.61. Hog prices are lower on the Daily Direct Morning Hog Report, down $1.13 with a weighted average price of $89.16, ranging from $88.00 to $93.00 on 1,015 head and a five-day rolling average of $92.65. Pork cutouts totaled 198.99 loads with 177.57 loads of pork cuts and 21.43 loads of trim.

Tuesday Morning Livestock Market Update - Mixed Trading Anticipated

GENERAL COMMENTS:

Cattle futures did what they were expected to do and that was to trade higher because of the Cattle on Feed report. Futures gapped higher with August and October live cattle contracts closing the gap as the day progressed. December and later contracts still hold their lower chart gaps. The strength of contracts by the end of the day was a bit disappointing based on the bullishness of the report. Traders remain uncertain over cash price strength this week with hopes of at least steady money. Boxed beef was lower to start the week following the strength of last week. Choice was down $0.55 with select down $1.03. This should have little influence on trading today as traders will be focused on cash trade that will probably be delayed until the end of the week.

Hog futures were on the defensive as pressure from lower cutouts on Friday weighed on the market. Added to that, cash was lower on the midday report and closed lower for the day down $1.87 on the National Daily Direct Afternoon Hog report. The rally on Friday was not supported by fundamentals resulting in lower trade yesterday. However, the market did hold up well as slaughter remains strong keeping hogs from backing up in the country. Cutouts were down again posting a loss of $0.97 which may result in further weakness today. The market is having difficulty finding consistent support leaving it vulnerable to selling.

	BULL SIDE		BEAR SIDE
1)	August and October cattle contracts were able to close their chart gaps yesterday eliminating the need to revisit those prices and leaving the way open to the upside.	1)	The strength of cattle futures yesterday was a bit disappointing based on the numbers in the Cattle on Feed report. The market had it factored in and is focusing on the potential for lower cash again this week.
2)	The report showed tight cattle numbers will be with us for an extended period providing support for continued strength.	2)	Packers are seeing better margins and will fight to keep those improved margins which may mean lower cash.
3)	Hog futures held some of Friday's gains even though fundamentals did not provide much support. Futures may have adjusted to current fundamentals and could trade in a range.	3)	Hogs did not see cash strength indicating packers have plentiful hogs available and are able to purchase them without having to be aggressive.
4)	October hogs continue to hold a large discount to cash which may limit downside risk.	4)	Traders see little reason to push October futures higher to close the discount to cash. Cash continues to show weakness, leaving the market in a bearish posture.