Tuesday Morning Livestock Market Update - Traders May Begin Week With Caution

GENERAL COMMENTS:

Cattle futures adjusted both for the long holiday weekend and to move in line with cash. Some traders continue to not believe cattle prices will decline very much as packers will need to step up soon as they may become short-bought on cattle. Slower summer demand has allowed them to hold back on slaughter and improve margins, but there may come a time they will need to purchase more aggressively. Steady to lower cash last week may carry over as feedlots may need to move cattle as it is costing money to hold for no better cash or lower cash. Boxed beef prices were higher Friday with choice up $0.70 and select up $1.04. The Commitment of Traders report showed fund traders increasing their long positions by 4,321 futures contracts, bringing their net-long positions to 94,715 contracts for live cattle. They increased their net-long positions in feeder cattle by 2,775 contracts, bringing their net-long positions to 14,663.

Hogs had a good week with futures closing higher from the previous Friday. Optimism rippled through the market last week despite cash struggling much of the time. The National Direct Afternoon report showed cash down $0.07. Strength in cutouts during the second half of the week provided support to round out the week higher. On Friday, cutouts gained $1.48 with a strong slaughter pace. Traders will watch to see the evidence of demand over the weekend as store shelves will need to be restocked. Packers may purchase hogs more aggressively Tuesday, improving cash as there is one less day this week to take care of business. The Commitment of Traders report showed fund traders increasing their long positions by 5,147 contracts, bringing their net-long futures positions to 27,649 contracts.

	BULL SIDE		BEAR SIDE
1)	Boxed beef has been stronger, improving packer margins and indicating consumer demand is good.	1)	Packers continue to work the market to their advantage and with a seasonal lull in beef demand, they will reduce slaughter, requiring less cattle to be purchased.
2)	Cattle futures are holding in a sideway pattern despite lower cash the past few weeks. Traders are optimistic demand will improve as time progresses.	2)	Feedlots have been holding cattle in hopes of higher cash, but all it has done is cost more money as they have fed them longer and have been receiving less for their labors. They may be willing to sell this week.
3)	Hog futures held well despite lower cash for the week. Demand is expected to have been good over the extended weekend with retail needing to restock early this week.	3)	Cash has not been able to provide solid support under the hog market. Further upside price potential might be limited.
4)	Packers may step up more aggressively as they have one less day this week to procure the hogs they need. This should provide further support to futures.	4)	It is a shorter slaughter week, which may limit the volume of hogs packers will be purchasing. This may leave them less aggressive.

Friday Closing Livestock Market Update - Hogs Keep Rallying

GENERAL COMMENTS:

It was a mostly quiet day for the livestock complex as traders paid little attention to the cattle contracts ahead of the week's end, but they did support the lean hog complex through the day's close. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.07 with a weighted average price of $80.06 on 2,094 head. December corn is up 3 1/4 cents per bushel and December soybean meal is down $4.40. The Dow Jones Industrial Average is up 105.21 points.

From Friday to Friday, the livestock futures scored the following changes: October live cattle down $1.03, December live cattle down $0.95; September feeder cattle up $0.65, October feeder cattle up $0.68; October lean hogs up $3.22, December lean hogs up $2.58; September corn down $0.06, December corn down $0.06.

**The markets will be closed on Monday, Sept. 4. Regular DTN livestock market commentary will resume on Tuesday, Sept. 5.**

LIVE CATTLE:

It was a mostly quiet day for the live cattle complex as traders left the contracts drift lower into the long weekend. A little more cash cattle trade developed in the South at $178, but it was just clean up in its nature. Come Tuesday, it will be interesting to see how packers handle themselves. They didn't buy many cattle last week and this week's volume seems to be light again. That could indicate that they'll need to be more aggressive next week in the cash market, but they're still going to try to work prices lower at every opportunity they get. October live cattle closed $0.67 lower at $180.15, December live cattle closed $0.62 lower at $184.17 and February live cattle closed $0.52 lower at $188.32. Throughout the week, Northern dressed cattle sold for mostly $290, which is $3.00 lower than last week's weighted average and Southern live cattle traded for mostly $179, which is mostly steady with last week's weighted average.

Friday's slaughter is estimated at 122,000 head, steady with a week ago and 1,000 head less than year ago. Saturday's slaughter is projected to be around 8,000 head. The week's total slaughter is estimated around 621,000 head, 11,000 head more than a week ago and 4,000 head less than a year ago.

Boxed beef prices closed higher: choice up $0.70 ($314.49) and select up $1.04 ($290.29) with a movement of 89 loads (56.58 loads of choice, 17.46 loads of select, 4.20 loads of trim and 10.87 loads of ground beef).

TUESDAY'S CATTLE CALL: Steady to somewhat lower. With packers not having bought a plethora of cattle this past week or the week before, they could need to buy more aggressively next week. But as the market continues to trek its way through the final weeks of summer, packers will continue to try to work prices lower.

FEEDER CATTLE:

With the corn complex closing $0.02 to $0.03 higher and the live cattle contracts rounding out the day lower, traders didn't see much opportunity to trade the feeder cattle contracts higher. Even so, demand continues to be electric throughout the countryside for both calves and feeders as buyers remain aggressive in procuring feeders. September feeders closed $1.42 lower at $251.85, October feeders closed $1.37 lower at $254.65 and November feeders closed $1.27 lower at $256.37. The Oklahoma Weekly Cattle Auction Summary shared that, compared to last week and throughout the entire state, feeder steers traded $1.00 to $3.00 higher and feeder heifers sold steady to $4.00 higher. Ster calves sold $4.00 to $8.00 higher and heifer calves under 500 pounds sold $5.00 to $10.00 higher, while heifers over 500 pounds sold $2.00 higher. Slaughter cows and bulls traded mostly steady. The CME feeder Cattle Index for Aug. 31: down $0.02, $248.93.

LEAN HOGS:

The lean hog complex closed higher and traders kept the lean hog contracts above the resistance plane of $82.00 that they broke through on Wednesday. Helping reassure traders that this was a good move was the slight uptick in pork demand as pork cutout values not only closed higher Thursday afternoon, but Friday afternoon too. The picnic saw the biggest daily advancement as it closed $7.57 higher. October lean hogs closed $0.50 higher at $83.05, December lean hogs closed $0.27 higher at $74.60 and February lean hogs closed $0.32 higher at $79.02. Pork cutouts totaled 225.82 loads with 208.70 loads of pork cuts and 17.12 loads of trim. Pork cutout values: up $1.48, $93.70. Friday's slaughter is estimated at 473,000 head, 10,000 head more than a week ago and 38,000 head more than a year ago. Saturday's slaughter is projected to be around 21,000 head. The CME Lean Hog Index for Aug. 30: down $1.41, $89.26.

TUESDAY'S HOG CALL: Steady. Packers may have to be more aggressive early next week given that they'll be springing into the week after a long holiday weekend.

Friday Midday Livestock Market Summary - Contracts Lean Lower

GENERAL COMMENTS:

Traders are keeping their distance from the cattle complex as the day nears Friday's noon hour. No more cash cattle trade has been reported, but business could pick up Friday afternoon. December corn is up 4 1/2 cents per bushel and December soybean meal is down $3.20. The Dow Jones Industrial Average is up 10.91 points.

LIVE CATTLE:

The live cattle complex is trading lower into Friday's noon hour as traders seem checked out of the market. It will be interesting to see what happens Friday afternoon in regard to whether or not any more cash cattle trade will develop. On one hand, it's fair to assume that packers need more cattle and will need to get aggressive ahead of Friday's end, but on the other hand, with it being a long weekend and Monday being a holiday, packers could elect to keep this week's business minimal and hope that that forces feedlots to be more willing to sell next week. No new cash cattle trade has been reported Friday, but more business could develop later Friday afternoon. Asking prices for cattle left to sell remain firm at $181 to $182 in the South and $292 to $294 in the North. October live cattle are down $0.75 at $180.07, December live cattle are down $0.82 at $183.97 and February live cattle are down $0.67 at 188.17.

On Thursday, Northern dressed cattle sold at mostly $290, which is $3.00 lower than last week's weighted average and Southern live cattle sold at mostly $179, which is mostly steady with the previous week's weighted average.

Boxed beef prices are higher: choice up $1.61 ($315.40) and select up $1.44 ($290.69) with a movement of 64 loads (44.75 loads of choice, 11.31 loads of select, zero loads of trim and 8.10 loads of ground beef).

FEEDER CATTLE:

The feeder cattle contracts are again trading lower as the market wishes to entice traders to support the market ahead of the long weekend, but traders aren't seeming to agree. September feeders are down $1.60 at $251.67, October feeders are down $1.22 at $254.80 and November feeders are down $0.90 at $256.75. The lack of interest from traders combined with the fact that the live cattle contracts are too trading lower, and the fact that the corn complex is trending a slight $0.03 to $0.04 higher all bodes against the market trading higher at this point.

LEAN HOGS:

The lean hog complex has traded lower throughout most Friday morning, but now that the noon hour is quickly approaching, traders are seeming to have a change of heart as they're now mildly supporting the contracts. October lean hogs are up $0.70 at $83.25, December lean hogs are up $0.25 at $74.57 and February lean hogs are up $0.22 at $78.92. Seeing slightly better interest in pork cutouts could be helping as not only are prices higher in Friday's midday report, but they closed slightly higher yesterday afternoon too. It's especially encouraging to see carcass price close higher when the belly isn't the only cut swinging the carcass's average. On Thursday afternoon the rib was mostly to thank for the carcass price's higher close, and this morning the picnic, rib and ham are all printing significant price increases.

The projected lean hog index for Aug. 31 is down $1.49 ($87.77) and the actual index for Aug. 30 is down $1.41 ($89.26). Hog prices are lower on the Daily Direct Morning Hog Report, down $0.11 with a weighted average price of $80.06, ranging from $73.00 to $81.50 on 2,094 head and a five-day rolling average of $80.71. Pork cutouts total 143.89 loads with 134.91 loads of pork cuts and 8.98 loads of trim. Pork cutout values: up $3.29, $95.51.

Friday Morning Livestock Market Update - Futures May Drift Into Weekend

GENERAL COMMENTS:

Cash cattle traded Thursday with prices steady to as much as $3.00 lower. Cattle in the North traded as much as $3.00 lower while Southern cattle traded steady to $1.00 lower. Most of the trade in the South was steady with last week at $179. Traders covered some short positions now that cash is known and there is optimism packers may need to purchase more cattle Friday but likely at steady money to finish up sales for the week. However, it is the final trading day ahead of a three-day weekend, which generally had traders squaring up their positions to limit exposure. This sometimes causes trading activity that is not related to fundamentals. Boxed beef prices Thursday were lower with choice down $1.32 and select down $0.28. Weekly export sales were good at 18,200 metric tons (mt), up 59% from the previous week, which likely provided some support to the market yesterday.

Nearby hog futures could not hold the gains from Thursday as the market remains choppy. The National Direct Afternoon Hog report showed cash down $0.42, putting pressure on the market. Cutouts showed a minor loss with a decline of $0.10. This did not provide the support the market needed to maintain the technical gains Wednesday. With a mixed close Thursday, it is uncertain whether there will be any short-covering ahead of the three-day weekend or if futures may drift Friday. Weekly export sales were supportive, totaling 36,900 mt, up 12% from the previous week. Saturday hog slaughter is estimated at 21,000 head as one packer needs to make up for downtime during the week.

	BULL SIDE		BEAR SIDE
1)	Southern cattle were able to trade mostly steady, which is considered a victory due to the shorter slaughter week ahed.	1)	Hot weather again is going to impact cattle performance, which will increase the cost of production as those cattle may need to be held longer.
2)	Good export sales indicate international buyers are not shying away at current prices. Current prices may keep exports strong and competition active for international and domestic demand.	2)	Cattle futures may settle back as traders might even-up positions ahead of the extended weekend.
3)	Hog weights showed a large decrease of 4 pounds from the previous week, averaging 274.3 pounds and 2.6 pounds below a year ago.	3)	Hogs may not see much fundamental support to push futures higher into the weekend. Packers are not likely to be aggressive.
4)	There may be some short-covering ahead of the weekend as packers may need to be more aggressive after the Labor Day weekend as store shelves will need to be restocked.	4)	Pork cutouts have been erratic but mostly weaker, which does not provide traders with the confidence the market has found support.