GENERAL COMMENTS:
A cash market for fed cattle that's $2 higher than last week, plus ongoing scarcity of feeder cattle and none-too-ample supplies of market-ready hogs all support the persistent bullishness in livestock futures Thursday. Outside markets are churning higher, too. September corn is up 6 3/4 cents per bushel and August soybean meal is up $10.20 per ton. The Dow Jones Industrial Average is up 191 points and NASDAQ is up 24 points.
LIVE CATTLE:
Live cattle futures are moving up again Thursday morning, taking the October contract up $0.85, for instance, to $145.325. This isn't a new contract high yet ($147.50 from April 2022), but with bullishness in the outside markets and the underpinning of a strong cash market this week, traders may be setting their sights in that direction. The all-time high on the continuous live cattle futures chart was $171.975 back in October 2014, so there is a bit of headroom still. The cash market traded Wednesday with relatively light numbers of Nebraska and Iowa cattle at mostly $229, roughly $2 higher than last week's weighted average. A light trade is being reported Thursday in the South at $140, roughly $3.50 to $4.50 higher than last week's weighted averages. Weekly export sales of 14,600 metric tons (mt) of beef were up 22% from the previous week, but down 17% from the prior four-week average, which just goes to show what the pace has been lately.
Thursday's cattle slaughter is projected at 125,000 head, which is even with week-ago numbers and 9,000 more than year-ago numbers.
Boxed beef prices are higher: choice up $0.49 Thursday morning ($263.72) and select up $1.61 ($238.69) with a movement of 62 total loads (33.13 loads of choice, 16.01 loads of select, 0 loads of trim, and 13.31 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures have been the weak spot on the quote sheet off-and-on Thursday morning, which should be no surprise when the feed markets are on another tear, but some contracts are posting light gains as we approach the noon hour. The August contract is down $0.325 at $180.35, the September contract is up $0.20 at $185.20, and the October contract is up $0.10 at $187.275. Soybean meal, up $10 per ton Thursday morning, is emphatically regaining its normal premium over DDGS and pricing itself out of many livestock feed rations but dragging the whole feed grains sector with it along the way. With not many deals to be had from that side of the cattle input equation, calf buyers will have to try to pressure the market any other way they can, but given the beef and dairy herds' supply numbers, that could be like squeezing blood from a stone.
LEAN HOGS:
Even with fairly light gains so far Thursday morning, the nearby lean hog futures contract is staying above $122 per cwt (up $0.05) and the October contract has stayed mostly above $101 per cwt, extending an upward trend that has added $10 to these contracts since early July. Sturdy pork cut-out values (now above $125 again) and lighter supplies of lighter hogs support the recent bullishness. This week's export sales report, however, may be a reminder that buyers may eventually become sensitive to higher pork prices. Net sales of 21,500 mt were a disappointment: down 31% from the previous week and down 6% from the prior four-week average. Soybean meal is surging higher again Thursday morning by as much as $10 per ton to $525 per ton. Thursday's hog slaughter is projected at 471,000 head, which is 3,000 more than week-ago numbers and 6,000 more than a year ago.
The CME Lean Hog Index from 8/9 was 122.09 (down $0.16) and the projected index for 8/10 is 121.86 (down $0.23). Pork cutouts Thursday morning total 126.85 loads with 108.74 loads of pork cuts and 18.12 loads of trim. Pork cutout values: up $2.18, to $125.85.
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