Wednesday Midday Livestock Market Update - Packers and Feedlots Go Toe to Toe

GENERAL COMMENTS:

Feedlots and packers are going rounds this week as feedlots soberly understand that, given how lackadaisical packers were in the cash market over the last two weeks, they'll need to buy cattle this week to avoid becoming short bought. However, at this point, very few cattle have traded as feedlots are demanding their full asking prices. corn is down 3 1/4 cents per bushel and December soybean meal is up $7.70. The Dow Jones Industrial Average is up 190.80 points.

LIVE CATTLE:

As the live cattle market keeps with Tuesday's ascend, feedlots are holding firm in their desire to get more money this week for cattle, and, consequently, the fat cattle market has yet to see much action as packers and feedlots are in a standoff. October live cattle are up $0.27 at $145.32, December live cattle are up $0.22 at $151.10 and February live cattle are up $0.07 at $155.27. Determining when trade will break loose, and when cattle will begin to sell, really falls on feedlots as they'll either accept packers' early bids or hold out and wait for more money. A few bids have been offered in the North as one major packer is offering $226 in Iowa, and another major packer is offering $222 in eastern Nebraska. Nevertheless, Wednesday afternoon's trade will be worth watching as feedlots clearly understand that with vigorous processing speeds and current showlists that they now possess more leverage in today's market.

Boxed beef prices are mixed: choice up $1.75 ($262.22) and select down $0.17 ($239.13) with a movement of 124 loads (64.38 loads of choice, 23.19 loads of select, 10.10 loads of trim and 26.53 loads of ground beef).

FEEDER CATTLE:

The feeder cattle market has cold feet in Wednesday's market, as one would suspect that feeders would be trading higher as corn is trending $0.02 to $0.03 lower in its nearby contracts, and as the live cattle market is scaling higher into the afternoon. Nevertheless, after Tuesday's ambitious trade, the market is trending lower but is still holding above the market's 40-day moving average, showing that its downside pressure isn't too extreme. September feeders are down $0.87 at $183.30, October feeders are down $0.62 at $185.47 and November feeders are down $0.32 at $186.70.

LEAN HOGS:

The lean hog market is trending mostly higher into Wednesday's afternoon as the market sees some more interest in its cash sector. October lean hogs are down $0.05 at $91.05, December lean hogs are up $0.17 at $83.67 and February lean hogs are up $0.40 at $87.47. We knew that packers were going to have to be more aggressive in this week's cash market given that they paid last week's market little to no attention, but how active they'll be really depends on demand. So, heading into Wednesday afternoon, be watchful of both processing speeds and pork cutout values as that could be an indicator of how aggressive packers will be in this week's cash hog market.

The projected lean hog index for Sept. 6 is down $1.78 at $101.48, and the actual index for Sept. 2 is down $1.48 at $103.26. Hog prices are higher on the Daily Direct Morning Hog Report, up $1.57 with a weighted average of $97.47, ranging from $90.00 to $110.00 on 5,138 head and a five-day rolling average of $97.04. Pork cutouts total 205.05 loads with 185.65 loads of pork cuts and 19.40 loads of trim. Pork cutout values: down $1.45, $102.88.

Wednesday Morning Livestock Market Update - Traders Look for Higher Cash

 

GENERAL COMMENTS:

Due to packers not being very aggressive last week, the anticipation is for them to step up to the plate this week now that the holiday is over. Even though they were not very aggressive last week, they managed to purchase some cattle for deferred delivery. Whether this leaves them less aggressive than anticipated this week or not will likely be seen Wednesday as cash trading is expected to surface. Boxed beef was higher with choice up $1.05 and select up $0.72. Holiday demand is being assessed and retail outlets are restocking shelves. Demand moving forward will be key to price potential.

Cash hogs finally showed some strength with the National Direct Afternoon Hog report posting a gain of $0.62. This was refreshing, although cash has a big hole it needs to climb out of due to the weakness last week. Packers needed to step up Tuesday and possibly the rest of this week to get back on track with slaughter. Cutouts increased $2.08 with bellies jumping $17.94. Now that the chart gap in October is closed, it provides more confidence to technical traders to buy into the market in anticipation of a price retracement.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures pushed higher as the market looks to regain the uptrend. This provides traders with the confidence to buy.	1)	With packers having purchased some cattle ahead last week, they may not need to be as aggressive this holiday-shortened week. There may be a limit to what they are willing to pay.
2)	Higher boxed beef as retail outlets restock production may cause packers to be more aggressive this week in the cash market.	2)	Corn prices trending higher may leave feedlots willing to move cattle aggressively rather than wait to see if cash might increase.
3)	With the holiday behind, packers may be more aggressive this week as they look to increase slaughter pace to get back to usual business.	3)	Packer margins will need to improve, or hogs will struggle as they reduce slaughter in the attempt to pay less for hogs and receive more for cutouts.
4)	Lower prices should spur demand as consumers try to stretch their dollar. Pork is a good buy at current prices.	4)	The U.S. dollar is at the highest level in 20 years which may impact pork exports.

Tuesday Closing Livestock Market Update - Stronger Tones Dominate Complex

GENERAL COMMENTS:

The long weekend was apparently just what the livestock complex needed as the market closed fully higher by Tuesday's end. The cash cattle market didn't see any trade develop but come Wednesday demand is expected to be greater and prices could be higher as well. Hog prices closed $0.62 higher on the Daily Direct Afternoon Hog Report, with a weighted average of $98.30 on 11,010 head. December corn is up 10 1/4 cents per bushel and December soybean meal is down $10.90. The Dow Jones Industrial Average is down 173.14 points.

LIVE CATTLE:

The live cattle market closed higher, seeing strong support for its market as traders came back from the long weekend seemingly ready to reignite the cattle market's rally. The combination of higher boxed beef prices and higher trade throughout the futures complex lays a strong tone across the market and will likely help feedlots get at least steady prices this week, if not even $1.00 or $2.00 more. The cash cattle market didn't see any business develop throughout Tuesday's trade, which will likely lead into an aggressive buying day come Wednesday. Substantially higher corn prices could rock the cattle market's morale, but given the descend that the contracts endured over the last two weeks, the live cattle complex is free from any immediate resistance pressure. October live cattle closed $0.50 higher at $145.05, December live cattle closed $0.62 higher at $150.87 and February live cattle closed $0.82 higher at $155.20. 

Tuesday's slaughter is estimated at 127,000 head, 1,000 head more than a week ago and 8,000 head more than a year ago. Monday's slaughter is estimated at 3,000 head.

Last week's negotiated cash cattle trade totaled 75,260 head. Of that, 68% (51,280 head) were committed for the nearby delivery, while the remaining 32% (23,980 head) were committed for the deferred delivery.

Boxed beef prices closed higher: choice up $1.05 ($260.47) and select up $0.72 ($239.30) with a movement of 125 loads (57.85 loads of choice, 29.55 loads of select, 19.84 loads of trim and 17.92 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Steady to $2.00 higher. Given that packers have been lackadaisical in their buying over the last two weeks, it likely means that they'll need to be more aggressive this week in order to secure enough product for upcoming kills.

FEEDER CATTLE:

Even with the corn complex closing $0.10 to $0.11 higher, that didn't seem to put a damper on the momentum that drove feeder cattle prices higher. September feeder cattle closed $0.30 higher at $184.17, October feeders closed $1.15 higher at $186.10 and November feeders closed $0.77 higher at $187.02. The combination of higher feeder cattle prices and higher trade seen throughout the live cattle complex was a dream for cattlemen to witness early this week. Before the long Labor Day weekend, the market struggled to trade higher as traders become complacent, but now that the market is back to a normal schedule and all can focus on the long-term realities of the market, higher tones are again noted. At OKC West Livestock Auction in El Reno, Oklahoma, at their midsession point and when compared to last week, steer calves were selling $3.00 to $5.00 higher on a light test, and although heifer calves were not well tested, a lower undertone was noted. Feeder cattle supply over 600 pounds was 10%. The CME Feeder Cattle Index for Sept. 2: down $2.29, $178.96.

LEAN HOGS:

Despite there being underlying concerns in the lean hog complex (pork demand, packer interest) Tuesday treated the lean hog market well as the marketplace closed fully higher. October lean hogs closed $1.07 higher at $91.10, December lean hogs closed $0.80 higher at $83.50 and February lean hogs closed $0.37 higher at $87.07. Packer demand was better this afternoon as there was right over 11,000 head traded and prices closed $0.62 higher. Packers have a balancing act to closely watch right now as they need to keep enough hogs on the books to ensure enough product for upcoming kills, but they can't afford to over buy right now, given how thin their own margins are. Nevertheless, it's going to be incredibly important to continue to watch both pork cutout values and processing speeds as they could indicate whether or not packers are going to be more or less aggressive in the days ahead. Pork cutouts are unavailable at this time. Tuesday's slaughter is estimated at 483,000 head, 3,000 head more than a week ago and 12,000 head more than a year ago. Monday's slaughter is estimated at 2,000 head. The CME Lean Hog Index for Sept. 1: down $1.52, $104.74.

­­­­­WEDNESDAY'S CASH HOG CALL: Steady to somewhat higher. Given that packers were so lackadaisical in last week's market likely means that they'll have to be more aggressive this week, but given how thin their margins are, the cash hog market won't see wildly higher prices.

Tuesday Midday Livestock Market Summary - Support Propels the Contracts at the Week's Start

GENERAL COMMENTS:

The livestock complex is off to a brisk start to the new week as the market sees ample interest from traders and hopes to see fundamental support back the technical move. The cattle complex stands a strong chance at rallying if corn doesn't pose too big of a treat, but the lean hog complex faces more pressure as packers are running with extremely thin margins in the pork sector. December corn is up 7 1/4 cents per bushel and December soybean meal is down $9.50. The Dow Jones Industrial Average is down 94.96 points.

LIVE CATTLE:

The live cattle complex is powering into Tuesday's afternoon as the market builds off the momentum that was established late last week. October live cattle are up $0.50 at $145.05, December live cattle are up $0.60 at $150.85 and February live cattle are up $0.62 at $155.00. The big question that the market possesses this week is: What will cash cattle demand be? Over the last two weeks, cash cattle demand has been lackadaisical as not very head traded and prices were lower. Given that packers and feedlots both know that thin supplies wait for them later into the fall/winter and undoubtedly into 2023, feedlots are going to become stronger in the market and in their ability to demand higher prices. Early asking prices in the South are noted at $144, and asking prices in the North are still unknown, but showlists in all major feeding regions are smaller.

Boxed beef prices are higher: choice up $0.98 ($260.40) and select up $3.23 ($241.81) with a movement of 59 loads (20.46 loads of choice, 15.34 loads of select, 12.94 loads of trim and 10.49 loads of ground beef).

FEEDER CATTLE:

The most actively traded October feeder cattle contracts is charging into Tuesday's trade full steam ahead as the market is taking full advantage of trader's strong support amid the minute rally in the corn complex. September feeders are up $1.10 at $184.97, October feeders are up $1.75 at $186.70 and November feeders are up $1.42 at $187.67. It's helping feeders cause that the live cattle market is rallying too, which is what feeder cattle buyers are obsessively watching as they're looking for upside potential on the backside of buying these feeder calves. With February 2023 live cattle printing at $155.05 and April 2023 live cattle printing at $158.60, buyers are anxious to work the markets this week and see what they can get bought.

LEAN HOGS:

The lean hog market is in a tough spot as the market has worked itself lower since the middle of August as packer margins have cut packers' ability to keep actively pursuing the cash hog market. The export market hasn't been lucrative as of late for the U.S. hog market as foreign countries are able to buy pork cheaper elsewhere, which has put even more pressure on our domestic market as U.S. consumer demand is deeply needed to keep prices elevated. Now that the Labor Day has passed, packers will be monitoring pork prices as they have no wiggle room in their current margin to chase cash prices if demand is null. October lean hogs are up $0.57 at $90.60, December lean hogs are up $0.42 at $83.12 and February lean hogs are up $0.12 at $86.82.

The projected lean hog index for Sept. 2 is down $1.48 at $103.26, and the actual index for Sept. 1 is down $1.52 at $104.74. Hog prices are unavailable on the Daily Direct Morning Hog Report because of packer submission issues. Pork cutouts total 180.66 loads with 161.36 loads of pork cuts and 19.30 loads of trim. Pork cutout values: up $3.78, $106.03.