GENERAL COMMENTS:
Given the market excitement and price volatility earlier in the week, traders seem to be willing to tread water through the Friday session with cattle futures mixed within a narrow range, while light-to-moderate losses are seen in lean hog trade. August lean hog contracts expire at the end of the day, which will be settled to the lean hog complex price, causing August contacts to show the most price movements of all nearby contract months. Traders will continue to closely monitor the movement of cash prices at the end of the week and direction of wholesale meat values, but this may not create any significant movement or interest in futures trade until early next week. Most traders appear to be very comfortable with current positions heading into the weekend. December corn is up 1 cent per bushel, and December soybean meal is up $0.90 per ton. The Dow Jones Industrial Average is up 29 points.
LIVE CATTLE
October live cattle are trading $0.05 lower at $128.45 midday. Trade Friday morning in all live cattle futures remains lackluster, with prices hovering from 22 cents lower in lightly traded August contracts to 15 cents higher in February futures. Although there seems to be very little active news in the cash cattle markets and grain and feeder cattle prices are trading very quietly, the focus appears to be to wait for additional direction from beef prices. Even if boxed beef values continue to shift higher as seen in the past few days, it is still unlikely that futures trade will be heavily affected, given the concern that current moves in beef values have less to do with long-term supply and demand levels and are based more on late-summer consumer demand. The fear in the market is that boxed beef prices will soon run out of gas once Labor Day buying has wrapped up and prices will start to tumble lower. Even though futures have not followed the boxed prices higher, sharp downward beef values could still cause traders to liquidate further positions. Cash cattle activity remains extremely quiet Friday morning with bids undeveloped. With light trade trickling into most areas over the last couple of days, it is expected that there may have been enough business done in the South. Given reported sales, one would expect that additional light trade would still need to develop in the North at some point before the weekend. Asking prices on cattle left on showlists remain at $123 and higher in the South and $200 and higher in the North. Trade for the week has been fully steady with last week, with live Southern ranges from $119 to $125 per cwt, mostly $121. Northern trade was reported at $198 to $204 per cwt, mostly $198 per cwt. Friday morning's boxed beef prices are higher with choice cuts up $4.80 at $322.73 and selects up $5.52 at $295.83 on a total count of 43 loads.
The light trade count continues to show limited overall movement in the boxed beef market at the end of the week. But with choice and select cuts surging $5 per cwt once again, the upward shift in wholesale prices remains impressive. At this point, there is more concern as to how will the market react once prices come back out of orbit, rather than how much higher prices will move. Dow Jones estimated Friday's cattle slaughter at 116,000, 1,000 more than a week ago.
FEEDER CATTLE
Feeder cattle futures are mixed in a narrow-to-moderate range Friday morning. August and September contracts are holding 30- and 37-cent-per-cwt losses with September futures trading at $163.17 per cwt. The most significant support is seen in November through March contracts as traders are once again focusing on the potential for long-term supply tightness in the nation's cow herds, which will most significantly affect feeder cattle levels through the winter and spring months next year. Cash feeder cattle prices were mixed. USDA weekly report from New Mexico feeder cattle prices posted steers steady to $3 higher with heifers untested compared to last week with generally strong demand. Ava, Missouri, prices are $2 to $8 per cwt lower in a very light test. The CME Feeder Index was priced at $156.25 for Aug. 11.
LEAN HOGS
October lean hog futures have shifted lower, falling $0.35 per cwt with prices at $86.12 per cwt midmorning. Pressure is evident in all lean hog futures trade as late-week position adjustments appear to be the focus of most traders Friday morning. Following the early week price tumble, and active firmness which has developed over the last couple of days, there appears more focus on profit-taking than long-term market direction. The lack of support in Thursday's pork cutout values has also added some caution to many traders at the end of the week, although it is uncertain yet how much additional pressure may develop in pork values in the upcoming days. Pork primal cuts continue to remain extremely volatile with Ham cuts gaining nearly $30 per cwt in the morning report Friday. Double-digit gains in butt and belly cuts added to the aggressive market shift at the end of the week. The question if this support can be maintained through the afternoon report is limiting trader interest at this point. Cutouts were up $11.56 at $130.93 Thursday morning on 263.72 loads. Negotiated hog prices are $0.36 per cwt higher with a weighted average price of $97.81 per cwt on 2,895 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $107.64 per cwt. Dow Jones estimated Friday's hog slaughter at 457,000, 2,000 above a week ago. The CME Lean Hog Index is estimated at $109.90 for Aug. 12.
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