GENERAL COMMENTS:
Firm buyer support developed Monday, although buyer intensity increased as the day continued. Live cattle futures lead the complex higher with a $2.50 per cwt rally in October contracts and $2.62 per cwt rally holding in December trade. Hog buyers returned to the complex on the hope that renewed trade may be seen in the near future as China remains focused on increasing pork supplies. Corn prices shifted higher Monday. December corn futures are 2 cents higher. Stock markets are higher in light trade. Dow Jones is 53 points higher with NASDAQ up 9 points. Cash cattle markets remain quiet with bids and asking prices undeveloped Monday. This early in the week, it is normal that cash markets are undirected and quiet with no significant activity expected until later in the week. Show lists appear to be mixed; higher in Texas, while lower in all other areas. Given the support in futures trade, feedlot managers are expected to increase asking prices in order to further the cash market gains seen last week. National Daily Direct afternoon hog report is $0.46 higher with a weighted average of $44.72 per cwt. Full range of $39 to $46 per cwt. Total volume reported is 13,067 head.
LIVE CATTLE
Uniform buying sparked active interest through the complex ($1.05 to $2.62 higher). Active gains developed in nearby live cattle futures as traders adjusted to the reduced cattle on feed numbers and even lighter cattle placements seen in Friday's report. The firm buyer support gained momentum through Monday's session with increased focus on tighter long-term supplies. The expectation is that short-term availability to packers will remain abundant, but this will change through the fall, as packers become more focused on securing beef supplies for early 2020. Total beef supplies increased 4% from last month, but fell 6% from year ago levels. This indicates that overall year over year beef demand remains strong despite the increased wholesale price levels. Beef cut-outs: lower, down, $0.88 (select, $190.84) and down $0.52 (choice, $216.45) with good demand and moderate offerings, 104 loads (59 loads of choice cuts, 25 loads of select cuts, 11 loads of trimmings, nine loads of coarse grinds).
TUESDAY'S CASH CATTLE CALL
Steady. Cash market interest is expected to remain quiet early Tuesday. The focus on futures activity may elevate asking prices, but bids are not likely to actively develop until midweek or later.
FEEDER CATTLE
Active gains focus on renewed live cattle gains ($1.27 to $2.70 higher). Reduced cattle placements in August helped spark additional underlying support in all cattle trade as moderate to strong buying developed through Monday's session. Active trade seen during the entire day helped to spark additional late day buying, which posted $2 per cwt or higher gains in October through May contract months. The focus on limited placements so far this summer and fall is not only helping to tighten overall cattle supply levels during early 2020, but it indicates that traders may focus on increased price levels through the next couple of months in order to move calves into feedlots. CME cash feeder index for 9/20 is $139.68, up $1.15.
LEAN HOGS
Hog buying develops on hopes of China trade ($0.25 lower to $2.12 higher). Despite the concerns last week that China may be backing away from the market, renewed expectations that China may be focusing on securing additional sales of soybeans is sparking interest that could carry over to pork markets. The focus on China's inability to supply needed pork with its domestic demand remains obvious, but who the country will import pork from continues to be the main question. With planned trade talks in October, right now seems to be the most logical and expected time for China to purchase pork from the U.S. if the intent is to move toward a trade deal. December futures led the complex higher with a $2.12 per cwt rally, although the rest of the complex holds moderate to firm gains. Pork cutouts bounced higher as increased support developed in early week trade. Pork cutout values added $1.03 per cwt, moving to $70.18 per cwt on 291 loads. CME cash lean index for 9/19 is $55.80, down $0.52. DTN Projected lean index for 9/20 is $55.13, down $0.67.
TUESDAY'S CASH HOG CALL
Steady to $1 lower. Given the aggressive demand for market ready hogs, packers are expected to remain aggressive in early bids. But hog supplies will likely limit significant support over the next couple of days. Most bids are expected steady to weak. Tuesday slaughter numbers are expected at 482,000 head.
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