GENERAL COMMENTS:
Live cattle futures have bounced higher during initial, although light trade Friday morning with October futures moving above $185 per cwt following a 72-cent rally, prices have started to erode as the trading session continued. The widespread pressure which swept through cattle trade Thursday seems to have calmed, at least in the live cattle complex, although firm pressure is still developing in feeder cattle trade. Traders will be closely monitoring the Cattle on Feed report Friday afternoon, as this will likely impact trade early next week. Right now, any additional market adjustments are likely to be focused on preparing for how the report will impact the overall market. Placement numbers are seemingly the biggest question market on the upcoming report. Hog futures have gained late week support, although given recent market pressure, this is still not able to change overall market direction. December corn is down 2 at $5.03 and December soybean meal is down $2.40 at $420.6. The Dow Jones Industrial Average is down 113.43 at 33,300.74.
LIVE CATTLE:
Live cattle futures have posted light to moderate gains during the first couple hours of trade, although as initial orders have worked through the complex, the buyer support seems to have calmed significantly. This is creating concern that prices may soften through the end of the trading session. Traders are focusing attention on the movement in cash market at the end of the day as well as the upcoming Cattle on Feed report. Overall cattle on feed numbers are expected to be 1% below year ago levels, and marketing is projected well below last year. These factors seem to have been already priced into the market, but overall placements have the largest question mark, which could bring additional volatility based on actual report numbers. It will be Monday before traders are able to trade the report results. A weekend to process and digest these numbers can add uncertainty of market direction. Cash cattle trade remains quiet Friday morning following light to moderate trade activity Thursday. Sales developed in the North at $294, a $2 per gain from last week, and $184 to $185 per cwt in the South. Southern deals are generally $1 to $2 higher than last week. It is uncertain just how much additional momentum cash markets may have, although it is possible that feeders may hold out until after the report is released Friday. October live cattle are $0.40 higher at $184.8, December live cattle are $0.18 lower at $185.125, February live cattle are $0.25 lower at $188.70.
Boxed beef prices are higher: choice up $1.02 ($305.14) and select up $0.76 ($278.24) with a movement of 88.00 loads (63.79 loads of choice, 8.59 loads of select, zero loads of trim and 16.11 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures remain on the defensive Friday morning. The aggressive market pressure over the last two trading sessions is causing some concern that additional market weakness could develop. Traders are heavily focused on the upcoming Cattle on Feed report released this afternoon. Although all areas of the report will be closely assessed, it appears that traders seem to be mostly focused on the overall placement numbers. Lack of confidence from various analysts seems to be the largest concern ahead of the report. Looking back at last month's report, there was also similar uncertainty ahead of the report. The challenge with monthly placement numbers is that it heavily accounts for seasonal factors throughout the entire complex. Just because overall feeder cattle are not moved into feedlots during a certain month, does not specifically indicate that they are not going to be placed during the year. Weather conditions, feed supplies and current market prices all play into the decision when these feeders are sold or delivered into feedyards, and this shifts every year. October feeders are $2.78 lower at $240.80, November feeders are $2.50 lower at $242. and January feeders are $2.03 lower at $243.35.
LEAN HOGS:
Sharp losses have quickly developed in lean hog futures trade Friday morning. After remaining insulated to active losses in cattle trade Thursday, the overall market weakness consuming the cattle complex has quickly gained momentum in lean hog futures. The combination of weak commodity markets, softness in morning cash values and pressure in pork values has sparked renewed selling pressure with little to no interest from buyers to step in and stabilize the market. It is likely that prices will continue to erode through the rest of the session, holding onto strong triple digit losses. These moves are establishing new contract lows in nearby contract months, which may inhibit support early next week. December lean hogs are $2.43 lower at $65.575, February lean hogs are $2.25 lower at $70.075 and April lean hogs are $2.28 lower at $76.675.
Hog Prices are lower on the Daily Direct Morning Hog report, down $3.82 with a weighted average of $69.85, ranging from $67.00 to $74.00 on 2,899 head with a five-day rolling average of $73.00. Pork Cutouts totaled 173.10 loads with 140.72 loads of pork cuts and 32.38 loads of trim. Pork cutout values are down $0.49 at $86.62.
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