GENERAL COMMENTS:
It was a mixed day for the livestock complex as the lean hog and feeder cattle contracts sank lower, but the live cattle market was able to close higher despite the grain market's rally. Heading into Tuesday's trade, feedlots are hopeful that packers will show the cash cattle market more interest. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.85 with a weighted average of $89.43 on 3,799 head. December corn is up 11 cents per bushel and December soybean meal is up $23.90. The Dow Jones Industrial Average is up 229.63 points.
LIVE CATTLE:
The live cattle complex stood strong throughout the day and was able to round out Monday's close on a higher note, but it's likely that traders look for support from the market's fundamentals before they're willing to move it much higher. October live cattle closed $0.07 higher at $145.75, December live cattle closed $0.37 higher at $151.35 and February live cattle closed $0.20 higher at $155.55. The cash cattle market didn't see any interest develop from packers, but after having paid the cash market little to no interest over the last three weeks, it's likely that packers will have to chase after the market more aggressively this week in order to have enough cattle for their rigorous kill schedule. New showlists appear to be mixed, higher in Nebraska/Colorado, but lower in Kansas and Texas.
Monday's slaughter is estimated at 125,000 head, incomparable to a week ago but 12,000 more than a year ago.
Last week Southern live cattle traded for mostly $141, which was steady with the previous week's weighted average, and Northern dressed cattle traded from $225 to $231 but mostly at $226, which was $2.50 lower than the previous week's weighted average in Nebraska. Last week's negotiated cash cattle trade totaled 82,382 head. Of that, 72% (59,585 head) were committed for the nearby delivery, while the remaining 28% (22,797 head) were committed for the deferred delivery.
Monday's WASDE report once again shared supportive news to the cattle market. Beef production for 2022 was raised by 16 million pounds as slaughter speeds continue to run relentlessly. The third quarter of 2022 actually saw a 25-million-pound dip in production from last month's report as carcass weights are waning, but the third quarter's draw back was more than offset by the 40-million-pound addition to the fourth quarter. Beef production for 2023 was raised by 70 million pounds, with the first quarter of 2023 being raised by 150 million pounds from August's WASDE report, while the second quarter of 2023 remained unchanged. Steer prices are expected to average $143.00 (up $3.00 from last month) for the third quarter in 2022, and fourth quarter prices are unchanged at $147.00. 2022 beef imports fell by 45 million pounds, and beef exports for 2022 held steady. Beef imports and exports for 2023 were unchanged from August's report.
Boxed beef prices closed higher: choice up $1.68 ($258.94) and select up $1.03 ($235.76) with a movement of 97 loads (52.73 loads of choice, 18.01 loads of select, 12.86 loads of trim and 13.70 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. Packers are the market's keenest traders, and so they're soberly aware that if they're going to keep the cash cattle market from running higher, the time to pump the brakes on the market is now before supplies of cattle get even thinner. Having said that, the simple fact that they've been lacks buyers in the market over the last three weeks will likely push them into having to buy more aggressively this week.
FEEDER CATTLE:
Is it even a Monday for the feeder cattle complex if a USDA report doesn't send grain soaring higher all while sending feeder cattle down hard? All jokes aside, the feeder cattle complex began to trade lower as the morning's WASDE report sent grain trading higher, which obviously doesn't bode well for feedlots who are already working with expensive cost of gains. September feeders closed $1.47 lower at $181.52, October feeders closed $2.45 lower at $183.12 and November feeders closed $2.02 lower at $184.80. It appears the entire market is waiting to see more dynamic trade in the cash cattle arena before it will again pick back up and trade higher too. At Joplin Regional Stockyards in Carthage, Missouri, at their midsession point, compared to the last sale two weeks ago, feeder steers and heifers traded $5.00 to $9.00 lower. And at Oklahoma National Stockyards in Oklahoma City, Oklahoma, at their midsession point, and when compared to the last sale two weeks ago, steer calves traded $4.00 to $8.00 lower, feeder heifers traded steady to $2.00 higher and heifer calves traded unevenly steady. The CME Feeder Cattle Index for Sept. 9: up $0.33, $180.91.
LEAN HOGS:
It was another day of weaker closes in the nearby lean hog complex but some of the market's deferred contracts were able to walk through Monday's end with higher prices. Nevertheless, the market is desperate for strong consumer demand as packers aren't going to stress their margins to the brink of red print just to chase the cash hog market. October lean hogs closed $1.30 lower at $91.87, December lean hogs closed $0.35 lower at $82.77 and February lean hogs closed $0.22 lower at $87.20. Pork cutouts total 325.31 loads with 290.86 loads of pork cuts and 34.45 loads of trim. Pork cutout values: up $2.84, $105.71. Monday's slaughter is estimated at 483,000 head, incomparable to a week ago but 13,000 head more than a year ago. The CME Lean Hog Index for Sept. 8: down $0.63, $99.57.
Monday's WASDE report shared mixed news for the hog complex. Pork production for 2022 gained 55 million pounds from last month's report as pork production in the third quarter is anticipated to be better than originally expected. Disappointing but expected news was shared about quarterly price projections as obviously pressures in the current market have dropped third quarter prices by $6.00 from August's WASDE report, and fourth quarter prices in 2022 are expected to average $65.00 which is down $4.00 from a month ago. Quarterly price projections for 2023 are unchanged from a month ago. 2022 pork imports fell by 50 million pounds, but pork exports also fell by 80 million pounds. Pork imports for 2023 fell by 100 million pounds and exports remained unchanged.
TUESDAY'S CASH HOG CALL: Lower. Packers aren't willing to pay more money for hogs at this point and even though prices have dropped from their recent highs, it's likely that the market is going to continue to erode until packers see more margin on their books.
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