Tuesday Morning Livestock Market Update - Follow-Through Buying May Continue

GENERAL COMMENTS:

Cattle had a fire lit under them with futures posting some nice gains. Futures are trying to correct from an oversold position but have so far not made much progress. A least there was some strength, which may bring more buyers into the market. There was no cash activity Monday as usual, but there is hope that packers may need to buy cattle more aggressively this week. It was positive to see boxed beef closing higher in both categories. Choice gained $2.19 while select increased $1.18. We must exercise caution as one day of gains for boxed beef does not indicate a change in trend. Packers want to see margins improve and they may not be very willing to pay higher money for cattle because of a positive start to the week. The Commitment of Traders report showed funds as net sellers of 11,148 contracts bringing their net-long positions to 62,075 contracts. Feeder cattle futures bounced likely due to an oversold market and the beginning of a new month and new quarter.

Hogs extended the gains of Friday in all months except October. October is trading closely in line with the index as it has less than two weeks left to trade. Price strength certainly did not come from cash as the National Direct Afternoon Hog report showed a decline of $2.41. Some strength came from technical buying and some strength came from the $2.34 increase of cutouts. Seeing that packers were not aggressive Monday, it is likely they will bid more aggressively Tuesday to obtain the hogs they need this week. Traders remain cautious over buying futures aggressively due to the large decline seen recently and the seemingly lackluster movement of pork. The Commitment of Traders report showed funds as net sellers of 23,535 futures contracts bring their net-long positions to 41,129 contracts.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures may be building a base which may give confidence to traders to buy into the market.	1)	A strong slaughter pace for cattle has not been able to provide sustained support for prices. Sufficient cattle remain available to the market.
2)	Feedlots will want at least $1.00 higher for their cattle this week as expenses increase and packers may need to purchase to maintain slaughter pace.	2)	Ongoing demand concerns remain in the market. Boxed beef prices may continue to struggle even though they were higher Monday.
3)	Hog futures should make at least a 50% retracement based on the magnitude of the recent decline.	3)	Pork cutouts have not been able to trend higher which keeps upside potential limited.
4)	Hog futures are oversold, and traders may be more willing by buy into the market now that it is a new month.	4)	Increasing slaughter speed has not yet been able to provide support under the market. There are sufficient hogs available for packers when they need them.

Monday Closing Livestock Market Update - Refreshing Day For The Complex

GENERAL COMMENTS:

It was a refreshing day for the livestock complex as the market kept its steam through closing and saw higher closes for pork and beef too. Heading into Tuesday's market, feeders will be closely watching the corn complex and feedlots will be looking for packer interest to potentially develop. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $2.41 with a weighted average of $82.67 on 3,150 head. December corn is up 3 1/4 cents per bushel and December soybean meal is up $2.30. The Dow Jones Industrial Average is up 765.38 points.

LIVE CATTLE:

It was a rallying day for the live cattle complex as the market absorbed traders' interest and was surprised to see the afternoon boxed beef report tout higher prices. As we noted throughout the month of September, September has historically been a month where boxes endure seasonal pressure. Now that the market is looking to October and what it may bring, cattlemen are hoping that domestic beef demand sees more interest. October live cattle closed $1.05 higher at $144.32, December live cattle closed $0.97 higher at $148.02 and February live cattle closed $0.90 higher at $151.55. The cash cattle market didn't see much interest, but with showlists lighter in all major feeding regions, feedlots are expected to price cattle higher this week. Southern feedlots have early asking prices starting at $145, and the North has yet to disclose their initial asking prices for the week. Even though packers have bought either right at or more than 100,000 head through the negotiated cash cattle market in the past two weeks, their interest is likely to be moderate again this week. In order to avoid becoming short bought in the weeks to come, packers will need to stay engaged in the cash market moving forward. 

Monday's slaughter is estimated at 127,000 head, 2,000 head more than a week ago and 7,000 head more than a year ago.

Boxed beef prices closed higher: choice up $2.19 ($245.94) and select up $1.18 ($221.31) with a movement of 116 loads (65.23 loads of choice, 21.20 loads of select, 11.48 loads of trim, 17.60 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. Packers will either play the card that they've got enough cattle bought and keep prices steady, or look to build inventory and potentially pay a little more

FEEDER CATTLE:

It's commending that the feeder cattle complex closed higher while the corn market posted a steady to $0.03 gain in its nearby contracts through closing. And while the addition of three pennies may not seem like much, any movement in the corn market is taken very seriously right now as prices are still incredibly high and drought-related pressures are hiking the expense of other feed resources too. October feeders closed $1.35 higher at $175.52, November feeders closed $1.42 higher at $176.05 and January feeders closed $1.35 higher at $177.02. As the market is now officially into the month of October, feeder cattle sale receipts are expected to grow noticeably. Buyers have been distant from the market as penciling a breakeven on these calves/feeders isn't easy, and with the volatility that's laced throughout the market thanks to inflation and higher interest rates, buyers are seeming to take their time when buying calves to hopefully ensure a breakeven. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, at their midsession point, and when compared to the week before, feeder steers were trading $1.00 to $3.00 lower while feeder heifers sold mostly steady. Steer and heifer calves traded unevenly steady. Extreme drought conditions are still plaguing most of the region, but cooler temperatures are expected this week. Feeder cattle supply over 600 pounds was 39%. The CME Feeder Cattle Index for Sept. 30: down $0.02, $175.44.

LEAN HOGS:

It was a strong day for the lean hog complex as the market not only saw a higher close throughout the futures complex, but pork cutout values closed higher too, and the day's slaughter was above 470,000 head. December lean hogs closed $1.50 higher at $77.72, February lean hogs closed $0.67 higher at $80.10 and April lean hogs closed $0.37 higher at $85.67. When looking through the pork cutout value data, its evident that the day's higher close came from the support that the belly added with it's $14.62 jump. While it's likely that the belly does see more demand as temperatures wane and consumers begin to look for more crockpot meals, it's also true that the belly is a fickle cut and swings violently -- high one day, low the next. Regardless, it's supportive that the futures complex has found the interest of traders and if slaughter speeds can remain elevated and consumer demand show steady interest, then a higher tone isn't out of reach. Once again, demand will likely be the biggest influencer of the lean hog market moving forward as packers won't think twice about reducing slaughter speeds to protect margin. Pork cutouts totaled 297.63 loads with 255.03 loads of pork cuts and 42.60 loads of trim. Pork cutout values: up $2.34, $99.93. Monday's slaughter is estimated at 472,000 head, 12,000 head less than a week ago and 7,000 head more than a year ago. Friday's hog slaughter was revised to 453,000 head, and Saturday's hog slaughter was revised to 107,000 head. The CME Lean Hog Index for Sept. 29: down $0.23, $94.91.

­­­­­TUESDAY'S CASH HOG CALL: Higher. Packers showed very little interest in Monday's cash hog market, which likely means that they'll have to be more aggressive either Tuesday or Wednesday.

Monday Midday Livestock Market Update - Boxed Beef Prices Print Higher

GENERAL COMMENTS:

The livestock complex is off to a strong start for the week as the three markets (live cattle, feeder cattle, and lean hogs) all see higher prices, and even though the week is young, meat demand is off to a stronger start too. December corn is down 1 1/4 cents per bushel and December soybean meal is down $1.90. The Dow Jones Industrial Average is up 595.64 points.

LIVE CATTLE:

The live cattle market is off to a strong start as the market not only sees moderate support technically, but the market was also surprised to see midday boxed beef prices print higher. October live cattle are up $1.35 at $144.62, December live cattle are up $0.82 at $147.85 and February live cattle are up $0.92 at $151.57. Given that the market appears to have found a bottom last week, higher trade isn't out of the question so long as traders stay engaged and the market isn't cut short with any worse news about our economy. The cash cattle market is expected to trade at least steady this week, if not a little higher ever given that showlists are current and that packers are continuing to want to buy week in and week out to avoid becoming short bought when supplies becoming inherently thinner. Showlists appear to be lighter in all feeding regions.

Last week, Northern dressed sales have had a range of $225.60 to $233, mostly $228, which is $1.00 lower than last week's weighted average. Southern live cattle have been marked at $143, which is fully steady with last week's weighted averages. Last week's negotiated cash cattle traded totaled 100,258 head. Of that, 71% (71,469 head) were committed for the nearby delivery while the remaining 28% (28,789 head) were committed for the deferred delivery.

Boxed beef prices are higher: choice up $1.38 ($245.13) and select up $1.70 ($221.83) with a movement of 54 loads (31.58 loads of choice, 7.57 loads of select, 6.94 loads of trim and 8.00 loads of ground beef). The choice/select spread sits at $23.30.

FEEDER CATTLE:

With the corn complex trending mostly steady and the live cattle market lending feeders support, the feeder cattle contracts are trading modestly higher into Monday's afternoon. October feeders are up $0.85 at $175.02, November feeders are up $0.75 at $175.37 and January feeders are up $0.82 at $176.50. The market appears to have developed a new support plane around $174.50 in the November contract and with no nearby concerns of resistance, the market has all the potential in the world to trade higher. Higher corn prices and any more deterioration in on our economy will likely weaken feeder cattle prices, but stronger fat cattle trade and a higher tone in the live cattle contracts will add support.

LEAN HOGS:

The lean hog complex is running into Monday's afternoon fully higher as the market believes that a support plane was established in last week's market. Last week the market was fanned higher on Friday thanks to supportive Quarterly Hogs and Pigs report and strong export report than came throughout Thursday's trade. The market's biggest concern moving forward will continue to be demand, which packers are hoping will come from both domestic and foreign markets. Late last week slaughter speeds dipped slightly, which will also be a factor that needs to continue to be monitored. October lean hogs are up $0.52 at $89.75, December lean hogs are up $1.65 at $77.87 and February lean hogs are up $0.82 at $80.25.

The projected lean hog index for Sept. 30 is down $0.58 at $94.33, and the actual index for Sept. 29 is down $0.23 at $94.91. Hog prices are lower on the Daily Direct Morning Hog Report, down $2.41 with a weighted average of $82.67, ranging from $79.00 to $97.50 on 3,150 head and a five-day rolling average of $88.12. Pork cutouts total 163.57 loads with 136.09 loads of pork cuts and 27.48 loads of trim. Pork cutout values: up $5.39, $102.98.

Monday Morning Livestock Market Update - Outside Markets Influence Trading Activity

GENERAL COMMENTS:

Cattle closed lower to end the quarter, succumbing to the pressures of the lower stock market and a bullish quarterly stocks report for corn. Cash cattle traded earlier in the week with no further change seen to close the week. The negative implications of the Cattle on Feed report the week before, the weakness of the stock market, and the bullish quarterly stocks report for corn impacted the market, moving prices to the lower end of the trading range established for the week in the October live cattle contract. With the concern over demand due to economic concerns and the continued weakness of boxed beef, cash cattle are not expected to see much, if any, upside this week. Boxed beef was mixed, the choice down $2.33 and select up $0.35. Feeder cattle saw substantial pressure closely related to the bullish Quarterly Grain Stocks report. October futures made a new low for the current trend, keeping the market in a solid downtrend.

Hogs did not have much to go on other than the fact that the market is oversold. This provided some support with short-covering taking place into the end of the quarter. The National Direct Afternoon Hog report showed cash down $3.27 along with cutouts down $1.21. Some residuals from the slightly friendly Hogs & Pigs report carried through to end the week. Even though the end of the week showed some strength, futures lost quite a bit of ground overall. The weakness of the stock market is leaving traders in a quandary over the level of demand that may be seen through the end of the year. If packers follow the pattern of last week, they may be aggressive buyers Monday to procure their needs early.

	BULL SIDE		BEAR SIDE
1)	Live cattle may be establishing technical support as the market did not make new lows through the end of the week.	1)	Feeder cattle may remain under pressure as corn looks to continue to move higher after the Quarterly Stocks report.
2)	Feeder cattle have nearly reached the objective of the head-and-shoulders bottom, which could trigger some short-covering in conjunction with an oversold market.	2)	Packer margins have been declining, which may prompt them to reduce slaughter speed to pay less for cattle on hopefully improved cutouts.
3)	Hog futures may have run out of sellers after the sharp decline over the past two weeks. Traders may feel more confident to buy the market in anticipation of a bounce.	3)	Pork cutouts have not been able to find sustained support, keeping the market on the defensive.
4)	Hog futures have a chart gap about $9.00 higher that may be filled sometime in the future.	4)	Positive export sales were not enough to trigger much buying interest by traders. It will take more to generate short-covering and new buying.