GENERAL COMMENTS:
Feeder cattle futures led the downward shift in livestock markets, with nearby contracts falling more than $2 per cwt within the feeder cattle complex. This added pressure to live cattle markets as the trading session continued, leaving October futures more than $1 per cwt lower in live cattle futures. Hog trade also turned lower with limited outside market support available, allowing traders a great opportunity to adjust positions and take profits in most markets. These market moves are making some in the industry nervous, but the general tone of these markets has not yet changed, creating additional optimistic expectations in both the cattle and hog contracts. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.70 with a weighted average of $105.67 on 5,482 hogs. December corn closed down 5 at $4.18 and December soybean meal closed down $1.30 at $282.5. The Dow Jones Industrial Average is down 24.58 at 45,271.23.
LIVE CATTLE:
Live cattle futures turned lower with active pressure seen through the complex throughout the entire trading session Wednesday. The late-day pressure Tuesday and continued market weakness spilling over from the feeder cattle trade and most other ag markets left buyers generally unsupported. Although beef values continue to remain strong with higher prices in the afternoon report, the uncertainty of how overall demand will hold through the fall months is causing some market nervousness. October futures led the market lower with triple-digit losses, while the rest of nearby contracts were confined to 50 to 90 cent losses. Cash cattle markets remain generally sluggish Wednesday afternoon, although some light trade has been reported in parts of the South at $242, fully steady with last week's weighted averages. Some Southern asking prices remain firm around $245, but they are still not established in the North. Significant trade volume will likely be delayed until Thursday and/or Friday. October live cattle closed $1.20 lower at $238.325, December live cattle closed $0.90 lower at $240.25 and February live cattle closed $0.85 lower at $241.625.
Wednesday's slaughter is estimated at 120,000 head, 2,000 head more than a week ago and 7,000 head less than a year ago.
Boxed beef prices closed higher: choice up $2.59 ($416.01) and select up $1.56 ($387.73) with a movement of 103.29 loads (60.60 loads of choice, 21.21 loads of select, 10.93 loads of trim and 10.55 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady to $1 Higher. Active cash cattle trade is expected to be pushed off until the end of the week, but the limited steady trade in the South that slowly developed midweek is expected to give feeders more momentum to hold out for steady to higher prices by Friday.
FEEDER CATTLE:
Feeder cattle were the main attraction in livestock traded futures Wednesday. Strong market pressure developed early and continued through the entire trading session. Although some financial and stock markets were able to bounce back from early losses, the softness in the feeder cattle trade was unable to recover. The market losses likely have more to do with general buyer apathy at current near record price levels, rather than any significant indication that the market will make a major turn from recent upward price shifts. Given the overall supply issues in the cattle market and likely strong demand through the foreseeable future, it is hard to find aggressive bullish reasoning that the current market rally will be drastically disrupted. But given prices at near record highs, light to moderate price corrections and position adjustments can likely be expected in the days and weeks to come. On the Springfield, Missouri, feeder cattle report, compared to last week, steers under 650lbs sold unevenly from 6.00 lower to 4.00 higher, and steers over 650lbs were 3.00 to 9.00 higher. Heifers under 600lbs sold steady to 5.00 lower, and 6 weight heifers sold steady to 4.00 higher. Demand was moderate on a moderate supply. September feeders closed $2.18 lower at $362.075, October feeders closed $2.20 lower at $361.5 and November feeders closed $2.40 lower at $361.075. The CME Feeder Cattle Index for August 29: down $0.09, $365.43.
LEAN HOGS:
Lean hog futures ended the session firmly lower with triple-digit losses seen in October and December contracts. Continued concerns about export demand for pork to China in the upcoming year are always on the minds of traders, although general outside market direction was likely more of a market driver Wednesday than long-term export and demand concerns. October futures led the market lower, but traders are still trying to narrow the price premium between the October and December contracts, which, as of now, stand close to $7 per cwt. October lean hogs closed $1.73 lower at $93.825, December lean hogs closed $1.05 lower at $87.125 and February lean hogs closed $0.78 lower at $89.30. Wednesday's hog slaughter is estimated at 489,000 head, 9,000 head more than a week ago and 4,000 head more than a year ago. Pork Cutouts totaled 391.18 loads with 340.24 loads of pork cuts and 50.94 loads of trim. Pork cutout values are up $0.61 at $114.73. The CME Lean Hog Index for August 29: down $0.25, $105.92.
THURSDAY'S HOG CALL: Steady. Limited price direction is likely through early Thursday, with traders continuing to focus on both futures market direction and wholesale pork values in the next couple of days. Continued attention will be placed on end of the end-of-the-week hog procurement to offset reduced runs Monday due to the holiday.
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