GENERAL COMMENTS:
Sharp losses in feeder cattle futures are gaining the attention of all cattle traders midday Thursday. Nearby feeder cattle prices are holding losses at or above $3 per cwt. At this point, price levels are still a long way away from daily trading limits, but given the sense of stability seen Wednesday, this market shift is viewed extremely bearish and could continue to change market direction over the near future. Live cattle trade has tried to remain as stable as possible through morning, but triple-digit losses are creeping into the complex at midday, focusing on further potential losses as the week continues. Hog futures are quiet through the morning with most contracts etching out narrow to moderate gains. With the focus on cattle trade Thursday, hog markets seem content quietly trading in a mixed to mostly higher direction while remaining in the background. December corn is up 2 cents per bushel and December soybean meal is down $3.00 per ton. The Dow Jones Industrial Average is up 156 points.
LIVE CATTLE:
Firm pressure is developing in live cattle trade Thursday morning. The underlying support seen Wednesday seems to have been quickly overshadowed by further concerns of beef market pressure following the holiday weekend. Trade volume is also expected to remain limited through the end of the week as traders start preparing for the long break, which may add further market weakness. Sharp losses in feeder cattle futures are the focus of all cattle trade Thursday morning. This could not only lead to pressure through the end of the week, but also a significant shift in trade direction during early September based on eroding technical support. Beef export sales last week totaled 15,600 metric tons. South Korea lead the weekly buying with a total of 7,100 metric tons. Taiwan and Japan were second and third in sales with 3,100 and 2,800 metric tons, respectively. Beef shipments totaled 18,100 metric tons with Taiwan and Japan at the top of the list with largest weekly shipments. Cash cattle markets are generally quiet Thursday morning, although scattered bids are seen through the north. Bids of $125 to $126 live and $200 dressed are holding in Nebraska. Bids are undeveloped through the morning in the South, but some additional trade is expected in most areas before the weekend. Light trade was seen in all major cattle trading areas Wednesday with prices at $123 to $124 live in the South and mostly $203 in the North. Asking prices are seen at $124 and higher in the south and $204 and higher across the north.
Thursday morning's boxed beef prices are lower in light trade, with choice cuts $0.53 lower at $337.92 and selects down $2.21 at $305.36 on a total count of 44 loads. Dow Jones estimated Thursday's cattle slaughter at 121,000, up 2,000 from a week ago, and 2,000 higher than year ago levels. With the upcoming weekend, slaughter is expected to remain lower Friday, but will return to normal next Tuesday.
FEEDER CATTLE
Feeder cattle futures have quickly turned aggressively lower Thursday morning with active pressure in all contracts. September and October futures have broken below the 40-day moving average, sparking additional technical pressure during the morning. With nearby contracts trading between $3 and $3.50 per cwt lower at midday, concerns of further end of the week losses have quickly developed. Overall, trade has slowed as the week has developed, leaving the potential for these wide market shifts in front of the long weekend. With feeder cattle sales expected to increased even more over the next several weeks, traders are focusing on the potential that price levels may be under more pressure based on seasonal supply levels. Although the long-term outlook for the market remains strong, this fall could see some wide market swings as more cattle come to market in the next few months. The CME Feeder Cattle Index was priced at $158.35 for Aug. 31.
LEAN HOGS
Limited market activity is seen in lean hog futures Thursday morning with prices hovering in a mixed but generally steady trading range. October futures are holding limited losses at midday, while the rest of the complex is lightly traded, but still trading higher. Most of the market support is seen in 2022 contract months as traders focus on potential longer-term pork demand growth. Overall volume remains extremely sluggish, and is likely to remain quiet until next week after traders return from the holiday break. Weekly export sales and shipments posted total weekly sales of 33,500 metric tons. Mexico is responsible for the majority of the reported sales with a total of 21,200 metric tons. China sales for the week were generally disappointing with only 2,000 metric tons. Total weekly export shipments are 28,200 metric tons with Mexico also leading the list, as China and Japan round out the top three. Cutouts are up $2.20 at $108.74 Thursday morning on 144.25 loads. Negotiated hog prices are unavailable at this time due to packer submission issues. Dow Jones estimated Thursday's hog slaughter at 477,000, 1,000 higher than a week ago, while 3,000 lower than year ago levels. The CME Lean Hog Index is unavailable at this time.
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