GENERAL COMMENTS:
The livestock complex had a mixed start to the week as the lean hog complex found support, but the cattle complex bobbled. If corn prices show some mercy in Tuesday's market, than the feeder cattle complex may be able to trade higher. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $8.55 with a weighted average of $126.35 on 9,020 head. December corn is up 5 3/4 cents per bushel and December soybean meal is up $13.10. The Dow Jones Industrial Average is down 643.13 points.
Monday's Cold Storage report shared that total red meat supplies in freezers were down 1% from the previous month, but up 23% from last year. Total pounds of beef in freezers were down 1% from the previous month, but up 27% from last year. Frozen pork supplies were down 2% from last month, but up 20% from last year. Stocks of pork bellies were down 20% from last month but up 53% from last year.
LIVE CATTLE:
The live cattle complex wasn't able to shake the doggish Cattle on Feed report that came out last Friday, and the nearby contracts felt it's wrath while the deferred contracts kept on trudging higher. August live cattle closed $0.37 lower at $141.22, October live cattle closed $0.75 lower at $144.50 and December live cattle closed $0.45 lower at $150.52. Given how the market sits fundamentally (strong boxed beef prices, aggressive throughput, thin showlists), this lower tone isn't expected to last very long or derail the market's trajectory. This week's cash cattle trade could be a gamble, however, as packers are buying for the holiday shortened Labor Day week, which will require fewer cattle than normal, and as some plants are planning on being dark even later this week. Nevertheless, the cash cattle market may see steady to slightly lower prices this week, but again the long-term trajectory is still higher. August live cattle closed $0.37 lower at $141.22, October live cattle closed $0.75 lower at $144.50 and December live cattle closed $0.45 lower at $150.
Last week Southern live cattle traded at mostly $142, which is $2.00 higher than last week's weighted average, and Northern dressed cattle sold for mostly $234, which is $4.00 higher than last week's weighted average. Last week's negotiated cash cattle trade totaled 101,555 head. Of that, 69% (70,495 head) were committed to the nearby delivery, while the remaining 31% (31,060 head) were committed for the deferred delivery.
Monday's slaughter is estimated at 125,000 head, 4,000 head more than a week ago and 8,000 head more than a year ago. New showlists appear to be lower in all major feeding states.
Boxed beef prices closed higher: choice up $0.24 ($264.52) and select up $0.42 ($238.36) with a movement of 89 loads (44.83 loads of choice, 21.26 loads of select, 9.96 loads of trim and 13.14 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Steady. Given that showlists are thin, feedlots may be able to hold prices steady, but given that packers are buying for a holiday-shortened week makes it somewhat unlikely that feedlots will be able to demand more money.
FEEDER CATTLE:
Throughout the day, the corn complex grew stronger and stronger, and with the feeder cattle market having to bear the weight of Friday's Cattle on Feed report amid a $0.05 to $0.07 stronger corn complex, the market had little hope of closing higher. August feeders closed $0.10 lower at $181.40, September feeders closed $0.40 lower at $184.35 and October feeders closed $0.30 lower at $186.47. The question that both the live cattle market and feeder cattle market yearn to know is: How long is the market going to be fixated on Friday's COF repot before it shakes that news and again clings to the market's strong fundamentals? It would surprise me if the market continued to trade lower past Wednesday, but if corn prices keep scaling higher, then feeder could remain pressured. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, at their midsession point and when compared to last week, feeder steers were trading $4.00 to $6.00 lower and feeder heifers were trading steady to $4.00 lower. Steer and heifer calves were trading unevenly steady. The CME Feeder Cattle Index for Aug. 19: up $1.45, $180.66.
LEAN HOGS:
The lean hog complex closed higher by Monday's end as the market has seemed to find some support for the time being. The real question that only time will answer is whether or not this is the market's true bottom for the move. October lean hogs closed $0.85 higher at $93.97, December lean hogs closed $0.32 higher at $84.47 and February lean hogs closed $0.67 higher at $87.70. It was rather interesting to see cash hog prices up over $8.00 higher on Monday's afternoon report as the market doesn't usually see support until Tuesday or Wednesday. The day's movement wasn't big (only 9,020 head traded), but to see price already $8.55 stronger indicates that packers are again going to chase after this week's cash hog market. Pork cutouts totaled 313.39 loads with 260.07 loads of pork cuts and 53.32 loads of trim. Pork cutout values: up $0.46, $117.61. Monday's slaughter is estimated at 478,000 head, 36,000 head more than a week ago and 39,000 head more than a year ago. The CME Lean Hog Index for Aug. 18: down $0.31, $120.29.
TUESDAY'S CASH HOG CALL: Higher. It was out of the ordinary to see cash hogs trading higher on a Monday, which could be an indication that packers are thinly bought and were eager to get some hogs bought for comfort.
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