GENERAL COMMENTS:
Strong gains in lean hog futures over the last two trading sessions are pushing spot October futures nearly $5 per cwt higher. Widespread buyer support in all lean hog trade is drawing more interest into the hog complex. Cattle markets remain weak at midday with early support in nearby feeder cattle futures slowly eroding as the session continues. December corn is down 3 cents per bushel and December soybean meal is up $3.10 per ton. The Dow Jones Industrial Average is down 128 points.
LIVE CATTLE:
Live cattle futures remain moderately lower with October holding a 62-cent loss at midday. The general weakness through the entire live cattle complex is adding to the price softness seen Wednesday. Concerns of cash and beef price weakness are starting to erode earlier week gains in live cattle trade. But as of now, it appears market lows which developed Monday may be able to hold through the week. This could help create a wide, but well-defined, market range which traders are looking for heading into the fourth quarter of the year. Beef exports totaled 15,300 metric tons (mt) last week. This is a 3,000 mt improvement from the previous week and the highest weekly export sales level since the middle of July. Japan and South Korea were the largest purchasers of beef last week making up 72% of all beef export sales. Beef shipments posted a total of 16,900 mtons shipped, with Japan and South Korea also the leading destinations, making up the majority of beef shipments for the week. Cash cattle activity remains generally quiet Thursday morning following light to moderate trade in most areas Wednesday. Southern live deals are reported at $123 to $124 per cwt, generally steady with last week's averages. Trade in the North on a dressed basis took place mostly at $200 per cwt, which is $1 per cwt lower than last week. Some live trade in the North was reported through the day Wednesday at $125 per cwt, but it is still uncertain just how much activity took place. It is likely that some additional trade will trickle into the market over the next couple of days, but the overall amount of cattle sold Wednesday may be enough to set the price trend for the week. Asking prices on cattle left on showlists are at $125 in the south and $202 dressed basis across the north. Packer bids remain undeveloped at midday but could slowly move back onto the table over the next few hours.
Thursday morning's boxed beef prices are lower in active trade, with choice cuts $1.58 lower at $318.24 and selects down $2.09 at $281.80 on a total count of 74 loads. Dow Jones estimated Thursday's cattle slaughter at 121,000, steady with a week ago, and 2,000 more than year ago levels.
FEEDER CATTLE:
Feeder cattle contracts continue to be mixed in limited overall trade Thursday morning. Nearby September futures have been able to hold onto narrow gains through the morning, although the pressure in live cattle trade has further eroded the rest of the complex. The ability to hold support which developed earlier in the week will continue to be a significant factor in all feeder cattle trade. At this point, traders appear to be trying to etch out limited positioning opportunities, although prices could see further volatility through the end of the week. This may bring more moderate to strong price shifts into late 2021 and early 2022 contract months. The CME Feeder Index was priced at $154.20 for Sept. 14.
LEAN HOGS:
Triple-digit gains have flooded through the entire lean hog futures complex Thursday morning. Strong October gains at midweek helped turn the tide on market technicals, as traders are now focusing on early week prices potentially setting support levels in the complex. October futures have rallied nearly $5 per cwt in the last two trading sessions, which caught the attention of commercial traders who have been hovering on the sidelines. Noncommercial traders are also starting to take notice, especially given the underlying bearish turn in several outside markets Thursday morning. Even though these moves higher may be enough to rekindle longer term buying back into the lean hog complex, a portion of this support is likely to quickly exit once outside markets appear to become more stable in the upcoming days. Pork sales in the weekly export sales report posted total sales of 25,300 mt with total shipments of 25,800 mt. This weekly sales total is a strong pullback from the 33,800 mt last week and may start another downward cycle in overall export sales through the upcoming weeks. China totaled total purchases of 1,800 mt with shipments to the country at 3,700 mt. Concerns are that as pork production continues to improve in China, the availability of aggressive export sales could become more limited. Mexico led the leader board for the week with 5,800 mt of pork sold, with Dominican Republic and Japan rounding out the top three sales destinations. Pork cutout prices bounced higher following strong gains in belly cuts. Active price shifts developed in several market cuts, leaving the potential for additional wide market swings in the afternoon report. Cutouts are up $2.47 at $108.17 Thursday morning on 154.74 loads. Negotiated hog prices are $1.91 lower per cwt with a weighted average price of $81.61 per cwt on 3,973 head on the National Direct Morning Hog Report. The swine/pork market formula price is listed at $92.72 per cwt. Dow Jones estimated Thursday's hog slaughter at 478,000 -- 3,000 less than week ago and 9,000 more than year ago levels. The CME Lean Hog Index is estimated at $94.45 for Sept. 15.
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