GENERAL COMMENTS:
Triple-digit losses developed in all livestock futures Tuesday as traders were unable and unwilling to break away from the wide-reaching pressure in most commodity and financial markets Tuesday. The generally weaker tone seemed to catch cattle and hog markets somewhat by surprise as losses from last week were significantly extended, creating not only further technical pressure but questions of the ability to establish support price levels any time soon. Intensity of market pressure over the next couple of trading sessions will be closely followed in cattle and hog futures with traders focusing on internal market shifts as well as general widespread neighboring market moves. Hog prices moved lower on the National Direct Afternoon Hog Report in light trade, fell $1.29 with a weighted average of $87.56 on 5,304 head. December corn is down 13 1/4 cents per bushel and December soybean meal is down $3.20 per ton. The Dow Jones Industrial Average is down 267 points and NASDAQ is up 10 points.
LIVE CATTLE:
Follow-through losses developed Tuesday as traders stick with the market weakness that developed over the last couple of weeks. October futures posted the least significant loss on the complex, but still managed to close over $1 per cwt lower. A combined loss in October live cattle futures over the last two weeks accounts for an $8.20 per cwt pullback in price levels. This now puts the market peak set in August a distant memory, with traders concerned about testing summer lows through the upcoming days and weeks. Widespread pressure in grain trade accelerated the downward market shifts Tuesday with traders looking for any sense of fall demand support from the beef sector. October live cattle closed $1.05 lower at $123.75, December live cattle closed $1.37 lower at $129.55, and February live cattle closed $1.45 lower at $133.70. Cash cattle markets were quiet Tuesday afternoon, not unexpected for the first day of the week due to packers remaining dark Monday due to the Labor Day holiday. Showlists remain mixed, with cattle offerings higher in Texas and Kansas, while generally lower in Nebraska and Colorado. This is not unexpected given the overall trade activity in each of these areas over the last couple of weeks. Packer interest may not significantly improve until late Wednesday, or more likely sometime Thursday. Feeders have yet to actively price cattle at this point, although the significant downward trend in futures may limit the overall desire to put asking prices on cattle until some of the fireworks settle down, hopefully later in the week. The focus on beef values following the holiday weekend is also expected to play a significant role in overall cash market direction over the next couple of weeks.
Tuesday's slaughter is estimated at 121,000 head -- even with a week ago and 1,000 more than a year ago. A strong Saturday kill is expected, which will minimize the overall impact of plants remaining dark Monday.
Boxed beef prices closed lower: choice down $1.23 ($335.19) and select down $2.23 ($301.90) with a movement of 109 loads (44.84 loads of choice, 20.48 loads of select, 12.57 loads of trim and 31.08 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL:
Steady. Limited early week activity is expected in cash cattle trade, keeping the focus on potential market movement and price direction most likely to take place Thursday and Friday. The sharp losses in futures trade Tuesday are putting the overall complex on the defensive despite feeders' hopes and expectations for market firmness.
FEEDER CATTLE:
Feeder cattle futures led the price tumble Tuesday as all contracts posted losses of $2 per cwt or greater by the end of the session. Double-digit losses in corn and soybeans were little help in bringing any sense of stability to the feeder cattle complex. Traders at this point are putting very little credibility in feed cost moves, but there is growing concern that noncommerical liquidation may continue across the entire complex. Spot-month feeder cattle futures have now shed nearly $11 per cwt from summer peak prices over the last two weeks. This is creating widespread market softness as a bearish undertone is expected to be seen in the upcoming sessions. September feeders closed $2.20 lower at $156.27 October feeders closed $2.42 lower at $160.05 and November feeders closed $2.40 lower at $162.87. The CME Feeder Cattle Index 9/6/2021: $157.37, up $0.20.
LEAN HOGS:
Firm losses developed in nearby October and December contracts Tuesday as traders found little to no support in other commodity or finanical markets. Underlying strong domestic and export demand has continued through late summer and is expected to remain firm through the upcoming months. This is one of the main reasons deferred lean hog futures have not followed the aggressive weaker tone seen in beef trade Tuesday. Nearby and deferred lean hog futures continue to hold within the previous sideways trend, although current price shifts are testing short-term support levels. October lean hogs closed $1.47 lower at $88.10, December lean hogs closed $1.32 lower at $8.77, and February lean hog futures closed $0.77 lower at $83.17. Pork prices continue to shift lower with firm pressure redeveloping in ham cuts despite increased early week volume. Pork cutouts totaled 428.42 loads with 395.89 loads of pork cutouts and 32.53 loads of trim. Pork cutout values: down $2.48, $105.67. Tuesday's slaughter is estimated at 481,000 head -- 2,000 head above a week ago and up 13,000 from a year ago. The CME Lean Hog Index 9/6/2021: down $0.86, $99.30.
WEDNESDAY'S CASH HOG CALL:
Steady to $1 lower. Underlying pressure across the entire hog complex is expected to create additional softness in initial cash hog bids early Wednesday.
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