GENERAL COMMENTS:
It
was week of lower prices for the livestock complex as traders ran from
topping charts and cash cattle sellers were left to simply take what
they were offered or not sell. Hog prices closed higher on the National
Direct Afternoon Hog Report, up $0.24 with a weighted average of $42.89
on 4,800 head. December corn is up 3/4 cent per bushel and December
soybean meal is up $6.60. The Dow Jones Industrial Average is up 161.60
points and NASDAQ is up 70.29 points.
From Friday to Friday livestock futures scored the following changes:
Aug LC off $2.57 Oct LC off $3.65; Sep FC off $2.90 Oct FC off $5.10;
Oct LH off $0.60 Dec LH off $0.25.
LIVE CATTLE:
Watching
this week's live cattle futures trade was brutal. It's amazing how
quickly the ground the market built itself up upon can crater and send
the complex sharply lower in a matter of one day. The maddening piece
about this whole equation is looking at the remaining time of 2020 and
wondering what the market has in store. Cash cattle prices are scarcely
lower and with the remaining 2020 contracts dancing from $103 to $108,
there's hardly any room for lower trade in order to keep contracts above
$100. It's true the industry has done a good job of cleaning up the
backlog, but cattle are still packing extra weight which adds additional
tonnage to the marketplace that retailers have to move. Though the
market has worked its way out of the hole made earlier this spring,
there's still a lot of unknowns.
Live cattle
contracts traded lower into Friday's close as traders veered away from
the market, unwilling to invest when there's downward pressure. October
live cattle closed $1.25 lower at $104.90, December live cattle closed
$0.85 lower at $108.50 and February live cattle closed $0.85 lower at
$111.85. This week's cash cattle trade was fully lower and actually
traded lower as the week progressed. Live trade this week ranged from
$103 to $105, and dressed trade was for $165 to $166. Friday's slaughter
is estimated at 116,000 head -- steady with a week ago and 1,000 head
less than a year ago. Saturday's slaughter is projected to be 66,000
head.
Boxed beef prices closed mixed: choice
down $2.14 ($229.40) and select down $0.60 ($214.86) with a movement of
114 loads (72.52 loads of choice, 11.67 loads of select, 19.99 loads of
trim and 10.29 loads of ground beef).
MONDAY'S
CASH CATTLE CALL: Lower. With packers sitting on a large supply of
cattle and with boxed beef prices starting to top, they are going to be
adamant about buying cattle cheaper.
FEEDER CATTLE:
Feeder
cattle contracts closed the week considerably lower with technical
pressure giving the market no other option but to scale lower. September
feeders closed $1.20 lower at $140.02, October feeders closed $0.97
lower at $140.17 and November feeders closed $1.00 lower at $140.60.
Unfortunately, the market may not see much support in the near future as
boxed beef prices begin to top and there's weakness in the live cattle
market. Thankfully there are a couple of weeks to buy the market some
time before the big feeder cattle run; at that point, hopefully, the
market will be in a position again to honor upward momentum. Earlier
this week, Northern Livestock Video Auction hosted their Early Fall
Preview and compared to their sale earlier this summer prices held
phenomenally well considering this week's board was substantially weaker
and the cash cattle market turned lower for the first time in roughly
two months. For the lighter weight divisions prices were $1.00 softer
but overall, the sale highly commendable. Steers weighing 500 to 549
pounds sold on average for $165, steers weighing 600 to 649 pounds sold
for $155.20, steers weighing 650 to 699 pounds sold for $150.96 and
steers weighing 700 to 749 pounds sold for $149.96. The CME feeder
cattle index 8/27/2020: down $1.46, $141.56.
LEAN HOGS:
Out
of all the livestock contracts the lean hog complex had the most going
for it this week as the market was able to close with some major cash
and even close a couple of days fully higher while both of the cattle
contracts dodged lower. But as the week traded, support for the lean hog
complex dwindled and ultimately sent the spot lean hog contract back
below its $55.00 resistance level. October lean hogs closed $2.07 lower
at $53.65, December lean hogs closed $1.37 lower at $55.20 and February
lean hogs closed $0.87 lower at $61.97. Pork cutouts total 333.33 loads
with 297.69 loads of pork cuts and 35.64 loads of trim. Pork cutout
values: down $1.39, $71.39. Friday's slaughter is estimated at 481,000
head - 5,000 head more than a week ago and 6,000 head more than a year
ago. Saturday's slaughter is projected to be 276,000 head. Thursday's
hog slaughter was revised to 472,000 head. The CME lean hog index
8/26/2020: up $0.26, $57.12.
MONDAY'S CASH
HOG CALL: Steady to slightly lower. You've got to hand it to the market
this week as the lean hog complex was able to close higher more often
than lower but as the market heads into next week, packers may not be as
aggressive as the hype from Labor-Day buying subsides.
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