Friday Morning Livestock Market Update - Choppy Pre-Holiday Trade Expected

GENERAL COMMENTS:

Live cattle futures traded in a tight range of $1.00 or less Thursday as traders looked at cash following the same levels established Wednesday. Southern cattle traded $1.00 lower with dressed cattle in the North down $4.00 to $5.00. Traders did not put much emphasis on the weakness of corn as lower corn futures might be temporary. Boxed beef was lower again with choice down $0.27 and select down $1.15. Trading activity and volatility are expected to be reduced as the market prepares for a three-day weekend. Feeder cattle responded to lower corn but not with gusto. Futures closed about $1.00 off their highs as traders seemed to lose interest as the day progressed and the potential for a bounce in corn prior to the weekend was anticipated. Feeder cattle at recent auctions have been moving at lower prices as buyers turned less aggressive.

Hog futures closed lower in all contracts except October. The cash market has not been friendly this week with the National Direct Afternoon Hog report down $5.06. Packers have not been aggressive this week in the country and seem to have been pulling more contracted hogs through the system, allowing them to pay less for hogs. However, that cannot be done indefinitely, and it is anticipated they will need to be more aggressive next week. Cutouts were down $1.44 on mixed product values. With no export sales reported, the market had little else to go on. Trading activity is expected to be limited Friday. Saturday slaughter is estimated at 10,000 head.

	BULL SIDE		BEAR SIDE
1)	Slaughter speeds continue to run strong as demand remains good. Even with higher food prices, consumers want beef.	1)	The downtrend remains intact in live cattle futures even though the market has corrected from being overbought.
2)	Retail outlets will need to restock after the holiday weekend, which could increase boxed beef prices and packers needing to be more aggressive next week.	2)	Cattle weights are increasing despite the strong slaughter pace. Packers may not need to be aggressive with purchases.
3)	Even though there is reduced hog slaughter surrounding the holiday weekend, it remains good and in line with a year ago.	3)	The steady decline of cash hogs this week does not provide a bullish scenario for the market after Labor Day.
4)	Hog weights are increasing but remain 1.3 pounds below a year ago, requiring more hogs to provide the required tonnage.	4)	Hog futures have seen lower lows and lower highs the past two days with the potential of prices retesting the recent lows and possible the chart gap in October.

Thursday Closing Livestock Market Update - Dreary Trade for Futures Ahead of Long Weekend

GENERAL COMMENTS:

Thursday's livestock market allowed for the cattle contracts to close slightly higher, but the lean hog complex closed lower, and hardly any cash hog trade developed. The Foreign Agricultural Service announced on Aug. 31 that they will be unable to publish weekly export sales data on Thursday, Sept. 1 or Thursday, Sept. 8, but expects to resume regular reporting on Thursday, Sept. 15. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $5.06 with a weighted average of $99.75 on 4,909 head. December corn is down 12 1/2 cents per bushel and December soybean meal is up $0.20. The Dow Jones Industrial Average is up 145.99 points.

LIVE CATTLE:

The live cattle complex closed slightly higher by Thursday's end, but that doesn't mean that the market didn't stumble throughout the day. First, boxed beef prices have been seen pushback throughout the week and again, in Thursday's afternoon boxed beef report, prices dropped lower. Second, it was last Thursday that the market was challenged to either question or accept the most recent slaughter data, which showed an increase in carcass weights all while grading percentages fall and slaughter speeds run relentlessly, and today, we were shown similar data as carcass weights again increased. Nevertheless, Thursday's market wasn't fiery or even eventful to watch, but I am excited for this Labor Day weekend to pass so some normalcy can creep back into the markets and we can get answers to some lingering questions. October live cattle closed $0.22 higher at $142.80, December live cattle closed $0.10 higher at $148.57 and February live cattle closed $0.17 lower at $153.15. The cash cattle saw a little more clean-up trade develop throughout the day, but nothing big enough to shake the market's current price trend. Throughout the week, Southern live cattle have traded for $141, which is $1.00 lower than last week's weighted average, and Northern cattle have traded for $228, which is $5.00 lower than last week's weighted average. 

Thursday's slaughter is estimated at 125,000 head, 1,000 head more than a week ago and 7,000 head more than a year ago.

Thursday's actual slaughter data shared that, for the week ending Aug. 20, steers averaged 904 pounds, which is 3 pounds more than a week ago but 1 pound less than a year ago. For the same week, heifers averaged 822 pounds, which is steady with the previous week but 2 pounds heavier than a year ago.

Boxed beef prices closed lower: choice down $0.27 ($258.07) and select down $1.15 ($236.59) with a movement of 109 loads (63.25 loads of choice, 30.91 loads of select, 5.08 loads of trim and 9.84 loads of ground beef).

FRIDAY'S CASH CATTLE CALL: Steady. Any trade that develops on Friday will like trend with the week's average.

FEEDER CATTLE:

As the corn market walked itself back $0.12 to $0.15 in its nearby contracts, the feeder cattle market was able to post a modest rally with the market's deferred contracts seeing the biggest gains. September feeders closed $0.70 higher at $183.15, October feeders closed $0.87 higher at $184.30 and November feeders closed $1.17 higher at $185.70. It's interesting that the deferred contracts saw the biggest gains throughout the day as that could stem from a couple different reasonings: 1) the corn crop will be well harvested, and feed prices won't be a volatile; 2) feeder cattle are expected to be in shorter supply than what they are in now. Regardless of the reason, even though the market is struggling this week, a higher trajectory is still insight. At Winter Livestock Auction in Pratt, Kansas, at their midsession point, when compared to last week, feeder steers weighing 700 to 1,000 pounds sold $2.00 to $5.00 lower and feeder heifers weighing 700 to 950 pounds traded $2.00 to $7.00 lower. Feeder cattle supply over 600 pounds was 97%. The CME Feeder Cattle Index for Aug. 31: down $0.67, $182.36.

LEAN HOGS:

It's hard to believe that so few of hogs have been purchased this week, with current slaughter speeds showing no sign of weakening. Obviously, we will see waned speeds this weekend and early next week as the market celebrates the Labor Day holiday, but what about future weeks? Either packers are planning on reducing processing speeds after Labor Day or they're going to have to be aggressive in the cash market to make up for lost time. October lean hogs closed $0.42 higher at $91.95, December lean hogs closed $0.10 lower at $83.77 and February lean hogs closed $0.25 lower at $87.55. Pork cutouts totaled 328.36 loads with 298.69 loads of pork cuts and 29.67 loads of trim. Pork cutout values: down $1.33, $101.86. Thursday's slaughter is estimated at 480,000 head, 4,000 head more than a week and year ago. The CME Lean Hog Index for Aug. 30: down $1.74, $107.62.

­­­­­FRIDAY'S CASH HOG CALL: Steady to somewhat lower. At this point, packers have most likely made up their minds and are simply choosing to buy as few of hogs as possible this week in the cash market. At this point, it wouldn't be surprising to see 4,000 to 6,000 head trade Friday, but much more than that isn't expected.

Thursday Midday Livestock Market Summary - Sluggish Tones Allow Cattle to Trade Slightly Higher

GENERAL COMMENTS:

It's been a less than electrifying day for the livestock complex as the market lacks substantial trader interest and hasn't been able to do much in the cash markets either. The Foreign Agricultural Service announced on Aug. 31 that they will be unable to publish weekly export sales data on Thursday, Sept. 1 or Thursday, Sept. 8, but expects to resume regular reporting on Thursday, Sept. 15. December corn is down 9 3/4 cents per bushel and December soybean meal is up $1.10. The Dow Jones Industrial Average is down 107.79 points.

LIVE CATTLE:

The live cattle market is trading mildly higher into Thursday's afternoon, although the market isn't expected to do much ahead of Friday's close given that boxed beef prices are trending lower and that cash cattle sales have been thin, and for sharply lower money this week. More than anything, the market lacks interest and momentum at this point as everyone is anxiously awaiting Friday's last bell to run into the weekend before summer is officially over. After the three-day weekend passes, the market will likely become more focused and, at that point, the cash cattle and live cattle marekt stand a chance at heading higher once again to prices that we reached two weeks ago. October live cattle are up $0.22 at $142.80, December live cattle are up $0.07 at $148.55 and February live cattle are down $0.15 at $153.17. The cash cattle market hasn't seen any renewed interest and it's likely that the week's business is done with, other than a couple clean up deals that could happen ahead of Friday's close. Throughout the week, Southern live cattle have traded for $141, which is $1.00 lower than last week's weighted average, and Northern cattle have traded for $228, which is $5.00 lower than last week's weighted average.

Boxed beef prices are lower: choice down $0.80 ($257.54) and select down $0.97 ($236.77) with a movement of 49 loads (20.46 loads of choice, 18.52 loads of select, 4.28 loads of trim and 6.23 loads of ground beef).

FEEDER CATTLE:

As the corn market dives $0.10 to $0.13 lower in its nearby contracts, the feeder cattle complex is jumping at the opportunity to trade higher despite what the rest of the livestock complex is doing. September feeders are up $0.85 at $183.30, October feeders are up $1.30 at $184.77 and November feeders are up $1.52 at $186.07. The live cattle complex is following in the feeder cattle market's upward blaze, but the cash cattle market's inability to trade cattle for steady to better money doesn't help propel the feeder cattle market at this point in time. After the Labor Day holiday passes, the market should be able to demand more interest and support.

LEAN HOGS:

The oddity of this week's cash hog market is extremely peculiar. Cash prices are unavailable Thursday morning because of packer submission problems, but as of Wednesday afternoon, the lean hog market had still not seem many hogs traded in the cash market and, over the last several months, packers have been buying their hogs on Tuesday or Wednesday as if it were clock work. Now, to packers' defense, we are coming up on a three-day weekend when plants will be running shorter kill schedules, but given how thin supplies of market-ready hogs are, it's still strange that we haven't at least seen 15,000 head traded on one single day. October lean hogs are down $0.20 at $91.30, December lean hogs are down $0.52 at $83.35 and February lean hogs are down $0.57 at $87.22.

The projected lean hog index for Aug. 31 is down $1.36 at $106.26, and the actual index for Aug. 30 is down $1.74 at $107.62. Cash hog prices are unavailable on the Daily Direct Morning Hog Report because of packer submission issues. Pork cutouts total 159.73 loads with 137.56 loads of pork cuts and 22.17 loads of trim. Pork cutout values: up $1.05, $104.24.

Thursday Morning Livestock Market Update - No Weekly Export Sales Report Today

GENERAL COMMENTS:

Once it was seen that cash cattle were trading anywhere from $1.00 to $5.00 lower, traders began selling futures more aggressively. Longer-term bullishness was put on hold as short-term negativity erupted in the market. The hopes for no worse than steady cash were dashed as some feedlots wanted to move cattle even if it meant at lower prices. Cattle in the South traded $1.00 lower while trading activity in the North showed some cattle trading as much as $5.00 lower. This likely set the stage for the rest of the week with the bulk of cattle trade likely taking place Thursday. Boxed beef showed choice down $1.45 and select down $1.94. Feeder cattle did not see the pressure of live cattle with September and October closing slightly higher. They were unable to capitalize on further weakness of corn.

Hogs reversed course, eliminating the gains of Tuesday and then some. Cash has not shown any support so far this week, which is unusual as they generally have been aggressive earlier in the week. The upcoming holiday weekend has reduced the need for packers to be aggressive. The National Direct Afternoon Hog report showed cash down $2.02. Thankfully, cutouts finally saw some strength with a gain of $1.03, but that provided no support to the market. There will be no weekly export sales report Thursday due to unresolved reporting issues at USDA, which are not expected to be fixed until later in the month according to Foreign Agricultural Services Administrator Daniel Whitley. Saturday slaughter is estimated at 10,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle numbers are expected to tighten as the year progresses and next year unfolds. Female cattle slaughter has been running unusually high so far this year.	1)	Price action Wednesday maintains the recent downtrend in live cattle futures over the past two weeks.
2)	Packers may be more aggressive after the holiday weekend as retail demand may be strong and shelves need to be restocked.	2)	Cash cattle trading lower is a disappointment, which may result in further selling pressure on futures.
3)	Pork cutouts finally showed some strength after an extended period of weakness. Lower prices may be stimulating demand.	3)	October hogs may be heading to close the chart gap below the market ahead of the three-day weekend.
4)	Packers should be more aggressive procuring hogs after having waited for lower prices by playing the holiday card.	4)	The uncertainty of export sales due to no report this week and next week may leave the market drifting as international demand is unknown.