Wednesday Midday Livestock Market Summary - Corn Market's Rally Still Jarring Cattle

GENERAL COMMENTS:

The cattle market's upside run was shaken by Tuesday's mind-blowing rally in the corn complex. Given that this week sits in front of Labor Day, it makes sense that packers aren't as aggressive in the cash market since they have dark days planned ahead. December corn is up 2 cents per bushel and December soybean meal is up $1.40. The Dow Jones Industrial Average is up 130.77 points.

LIVE CATTLE:

The live cattle complex is trending lower into Wednesday's afternoon as the market has a doggish tone cast over its marketplace. The market's fundamentals are still strong: showlists are extremely current, beef demand is stable and processing speeds are running vigorously, but as traders look at the lackadaisical cash cattle market and bumpy ride that the market took on Tuesday -- thanks to higher corn -- traders are leery. October live cattle are down $0.80 at $143.80, December live cattle are down $0.65 at $150.02 and February live cattle are down $0.40 at $154.55. The cash cattle market has a few bids sitting on the table, but at this point, feedlots seem uninterested in their presence. Bids of $148 live and $230 dressed are being offered in Nebraska, but otherwise the market is idle. It's not surprising to see that packers haven't shown much interest in this week's cash cattle market as they're buying for short kill weeks (both this week and next). More business is likely to develop but this week's trade will likely be well below 100,000 head.

Boxed beef prices are mixed: choice up $0.43 ($263.23) and select down $0.25 ($238.55) with a movement of 68 loads (34.30 loads of choice, 14.34 loads of select, 7.60 loads of trim and 11.68 loads of ground beef).

FEEDER CATTLE:

The corn complex isn't as sporty as it was in Tuesday's market -- it's trending steady to $0.02 lower in its nearby contracts, but still the feeder cattle contracts are seeming to lick their wounds thus far through Wednesday's market as they trend slightly lower into the afternoon. The cattle market is far better at this point than what it was a year ago, but still with heightened input costs for everything, cattlemen and traders alike are leery of the marketplace Wednesday as their concerns of higher feed prices lingers. September feeder cattle are down $0.10 at $182.35, October feeder cattle are down $0.30 at $184.15 and November feeder cattle are down $0.47 at $185.95.

LEAN HOGS:

The lean hog complex isn't trending well into Wednesday's afternoon, keeping with its descend as the market absorbs Tuesday's horrendous close for pork cutouts. October lean hogs are down $2.32 at $90.57, December lean hogs are down $1.90 at $82.32 and February lean hogs are down $1.47 at $86.10. The day has seen a sizeable movement of hogs, but the market is only trending $4.86 higher from Tuesday's market as packers have been able to slightly pump the brakes on the cash market. Thursday morning the hog complex is hopeful for a strong export report but knows that limited interest could be possible as other countries offer cheaper product.

The projected lean hog index for Aug. 23 is down $1.18 at $118.00 and the actual index for Aug. 23 is down $0.80 at $119.18. Hog prices are higher on the Daily Direct Morning Hog Report, up $4.86 with a weighted average of $126.14, ranging from $111.50 to $133.00 on 19,383 head and a five-day rolling average of $123.14. Pork cutouts total 141.34 loads with 119.69 loads of pork cuts and 21.65 loads of trim. Pork cutout values: down $0.57, $104.51.

Wednesday Morning Livestock Market Update - Hogs May See Further Pressure

GENERAL COMMENTS:

Live cattle traders searched for a reason to trade one way or the other with limited direction surfacing. It was thought cash could be steady this week and a few transactions Tuesday seemed to indicate that may be the case. Wednesday will test the resolve on both sides and set direction. Live cattle were able to remain stable despite the strength of corn futures. The same could not be said for feeder cattle as they were under pressure even though there remains strong demand for feeder cattle at auctions. Boxed beef was mixed with choice down $1.72 and select up $0.44. Traders may take a wait-and-see attitude Wednesday.

Pork cutouts took a beating Tuesday with one of the largest declines I have seen. Cutouts fell a whopping $12.53 with bellies falling $48.59 and hams down $11.07. The full impact of this large decline might surface in Wednesday's trade as this final price was posted after the close. However, cutouts were down substantially with bellies down hard already on the morning report which influenced the trade, taking it from the strong gains to negative territory. Cutouts remaining that low will not help trading Wednesday. The bright spot was that the National Direct Afternoon Hog report showed a gain of $0.77.

	BULL SIDE		BEAR SIDE
1)	Live cattle held well, shrugging off the bearish Cattle of Feed report and higher corn futures for the second day.	1)	Higher corn futures will keep some pressure on cattle, resulting in feedlots wanting to move cattle rather than hold for higher cash.
2)	There is a strong potential for steady cash cattle trade this week despite some plants possibly being dark on Saturday and Labor Day just around the corner.	2)	The uptrend of cattle has been violated, which could increase long liquidation as futures correct from being overbought technically.
3)	Hog slaughter continues to improve as lighter weights and good demand keep packers aggressive.	3)	The substantial weakness of cutouts Tuesday may be difficult to overcome. Significantly higher belly stocks in July compared to a year ago may leave buyers less aggressive.
4)	If cutouts regain the large losses of Tuesday, futures may be able to rebound similar to what they did earlier yesterday.	4)	The failure of hog futures to hold strong early gains may indicate traders are not willing to buy and hold. Price rallies may be seen as selling opportunities.

Tuesday Closing Livestock Market Update - Lean Hog and Feeder Cattle Markets Beat Up

GENERAL COMMENTS:

Between the drastic close in pork cutout values and the corn market's effect on the feeder cattle market, the live cattle complex was the mellow market of the livestock complex throughout the day. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.77 with a weighted average of $127.12 on 20,218 head. December corn is up 26 1/4 cents per bushel and December soybean meal is up $11.80. The Dow Jones Industrial Average is down 154.02 points.

LIVE CATTLE:

The live cattle complex minded its own business throughout Tuesday's market and impressively was able to close out the day higher. It wouldn't have been surprising to see the corn market's surge affect the live cattle complex and send it trading slightly lower but given how thin market-ready supplies of cash cattle are, the market held its own. October live cattle closed $0.10 higher at $144.60, December live cattle closed $0.15 higher at $150.67 and February live cattle held steady at $154.95. There was a little bit of trade that developed in the South at $142 which is mostly steady with last week's market. The North remained mostly quiet with just a handful of cattle trading, and certainly not enough to say that a trend was established. The market should see more business develop come Wednesday. 

Tuesday's slaughter is estimated at 126,000 head -- steady with a week ago and 6,000 head more than a year ago.

Boxed beef prices closed mixed: choice down $1.72 ($262.80) and select up $0.44 ($238.80) with a movement of 152 loads (95.62 loads of choice, 21.14 loads of select, 13.99 loads of trim and 21.11 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Steady. Given that packers have some dark days ahead of them it's likely that prices remain steady this week.

FEEDER CATTLE:

It's crazy just how much can change in a day -- and the grain complex is a perfect example of just how fast a market can run! On the announcement of weakening crop ratings and lower yield estimates the corn complex closed higher and sent the feeder cattle market trembling lower. The nearby corn contracts were able to add $0.23 to $0.26 by the day's end, and the feeder cattle market did all that it could to erode as little as possible. Thankfully the market can absorb this news while feeder cattle demand still remains extremely aggressive which helped the market from closing even lower than it did. September feeders closed $1.90 lower at $182.45, October feeders closed $2.02 lower at $184.45 and November feeders closed $2.17 lower at $186.42. At Cattlemen's Livestock in West Point, Mississippi, compared to last week feeder steers sold $2.00 to $12.00 higher, and feeder heifers sold $2.00 to $8.00 higher, while feeder bulls sold $6.00 to $15.00 higher. Slaughter cows sold $6.00 to $7.00 higher and slaughter bulls traded steady. Feeder cattle supply over 600 pounds was 11%. The CME feeder cattle index 8/22/2022: down $0.06, $180.60.

LEAN HOGS:

The corn market was one whirlwind that we all had to get our minds wrapped around, but the staggering $12.53 drop in pork cutout values was another. Our databases show that today's drop is the second steepest loss on record, following the $12.93 loss posted on 6/22/2021. Today's gut-wrenching decline stemmed from the $48.59 drop in bellies, though it is also important to note that the ham did fall $11.07. Nevertheless, Wednesday's hog market could be faced with a lower futures market as traders try to sort out what happened to pork demand, and if this was a rash cut made on bellies, or if this is a signal of demand. October lean hogs closed $1.07 lower at $92.90, December lean hogs closed $0.25 lower at $84.22 and February lean hogs closed $0.12 lower at $87.57. Pork cutouts totaled 415.72 loads with 365.65 loads of pork cuts and 50.06 loads of trim. Pork cutout values: down $12.53, $105.08. Tuesday's slaughter is estimated at 480,000 head - 4,000 head more than a week ago and 7,000 head more than a year ago. The CME lean hog index 8/19/2022: down $0.31, $119.98.

­­­­­WEDNESDAY'S CASH HOG CALL: Steady. Given that over 20,000 head traded in Tuesday's market and that pork cutout values saw such a staggering loss, it wouldn't be surprising to see hog prices remain steady if not even trend lower come Wednesday.

Tuesday Midday Livestock Market Update - Grain News Overwhelms the Feeder Cattle Market

GENERAL COMMENTS:

While the lean hog and feeder cattle markets dance with problems in their own markets, the live cattle complex is trending higher into Tuesday's afternoon somewhat unchallenged. The feeder cattle complex is sweating bullets as the corn market rips higher and shows that there could be problems with this year's crop. December corn is up 30 1/2 cents per bushel and December soybean meal is up $11.40. The Dow Jones Industrial Average is down 160.45 points.

LIVE CATTLE:

The live cattle complex is leaning into Tuesday's afternoon fully higher and somewhat eager to see what the cash cattle market can the week before Labor Day. August live cattle are up $0.62 at $141.85, October live cattle are up $0.42 at $144.92 and December live cattle are up $0.42 at $150.97. The market is showing that it's willing to trade higher after closing slightly lower Monday afternoon, but traders need to see strong fundamental drive to do so. The cash cattle market could potentially hold the market steady this week, but then again it wouldn't be surprising to see prices fall lower given that some plants are planning to be dark this Saturday and that next week will see a reduced kill schedule too because of the holiday. Some light business has begun to develop in Texas for $142, which is about steady with last week's business, but otherwise the market hasn't seen any interest from packers. Asking prices in the South are noted at $145 but are not yet established in the North.

Boxed beef prices are mixed: choice down $0.44 ($264.08) and select up $1.12 ($239.48) with a movement of 94 loads (61.74 loads of choice, 11.68 loads of select, 6.18 loads of trim and 14.20 loads of ground beef).

FEEDER CATTLE:

It's a tough day for the feeder cattle complex because not only are corn prices trading higher, but so are all the other grain markets, and by trading higher, I mean flat soaring into Tuesday's afternoon. The grain market began to soar higher as falling crop ratings and the belief that yields are continuing to erode has everyone questioning what exactly this year's crop will amount to. Dana Mantini, DTN's Senior Market Analyst, said, "Corn conditions fell to the second lowest rating since 2012, and findings so far from the Midwest crop tour seem to find more problems related to drought in the central and Western Corn Belt. New crop corn and soy futures have both moved above the closely watched 50-day moving average." As the noon hour nears the corn complex is rallying anywhere from $0.27 to $0.30. Nevertheless, the feeder cattle market has become overpowered by grain market news and is trending fully lower into the afternoon. September feeders are down $1.35 at $183.00, October feeders are down $1.30 at $185.17 and November feeders are down $1.50 at $187.10.

LEAN HOGS:

The lean hog complex is a mixed bag as the futures complex is trading higher, but Tuesday morning's midday pork cutout value posted a drastic $11.14 regression. October lean hogs are up $0.25 at $94.22, December lean hogs are up $0.72 at $85.20 and February lean hogs are up $0.97 at $88.67. The pork cutout value fell so direly as the bellies printed $47.37 lower Tuesday morning. If pork cutout values do show a steep erosion on the afternoon's report, then the contracts could come under pressure. The cash hog market is seeing light interest in the market to start the day off, as it seems that packers are gauging demand and could wait until Wednesday to really begin to buy hogs.

The projected lean hog index for Aug. 22 is down $0.80 at $119.18, and the actual index for Aug. 19 is down $0.31 at $119.98. Hog prices are higher on the Daily Direct Morning Hog Report, up $0.27 with a weighted average of $121.28, ranging from $112.50 to $135.00 on 5,255 head and a five-day rolling average of $123.91. Pork cutouts totaled 232.99 loads with 198.65 loads of pork cuts and 34.34 loads of trim. Pork cutout values: down $11.14, $106.47.