Monday Morning Livestock Market Update - Traders to Begin Week With Caution

GENERAL COMMENTS:

Cash cattle showed light trade Friday with prices in the South mostly at $180, which was $1.00 higher than the previous week and $290 to $292 in the North and steady to $2.00 higher. Another week is before us, and it is a guessing game as to cash potential. We know cattle supplies are tight, which should continue to support the market; but there will also be a threshold as to what consumers will pay for beef. International demand was a bit lower according to the weekly export sales report with 11,900 metric tons (mt) of beef exported. This was a decrease of 34% from the previous week. Boxed beef was mixed with choice up $1.24 and select down $0.12. The Commitment of Traders report showed funds increasing their long positions in live cattle by 52 contracts, bringing their net-long positions to 94,767 contracts. Funds decreased their longs positions by 1,476 bringing their net long positions to 13,187 contracts.

Hog futures received no support from the cash market as the National Direct Afternoon Hog report showed a decrease of $1.12 to end the week. Packers are not expected to be very aggressive Monday as they see how many hogs they need and what is available to begin the week. Futures could see some buying interest due to cutouts being up $3.59. However, the erratic nature of cutout prices may not garner much attention. Cutouts will need to see consecutive days of gain to trend higher. Futures could rebound somewhat Monday as the recent pattern has been futures price movement in opposite directions from day to day. Weekly exports sales were down 29% from the previous week at 26,300 mt, lacking robust demand from international buyers even though pork prices are low. The Commitment of Traders showed funds adding 5,063 futures contracts, bringing their net-long positions to 32,712 contracts.

	BULL SIDE		BEAR SIDE
1)	Cash cattle traded steady to higher last week on light trade, providing confidence to feedlots to hold again this week.	1)	Cattle futures already have higher cash factored in, which could result in sideways to lower trade early in the week.
2)	New contract highs last week kept funds active in the market, adding to their long positions. Fundamental traders remain friendly as cattle numbers remain tight.	2)	The trend higher will not last forever as there will be a level at which consumers will reach a threshold and reduce their demand for beef.
3)	Strong cutouts at the end of the week could indicate demand was strong during the week and retail will need to restock pork early this week supporting prices.	3)	Pork cutouts just cannot find sufficient support as prices remain erratic. This keeps traders scalping the market for short-term potential profit, keeping prices volatile.
4)	Heavy slaughter Saturday may require packers to be more aggressive purchasing hogs in the countryside early this week to fill slaughter.	4)	The uncertainty over the full implementation of Prop 12 on Jan. 1 keeps an element of bearishness in the market.

Friday Closing Livestock Market Update - Cattle Keep on Trucking

GENERAL COMMENTS:

The lean hog complex didn't see the support that the cattle contracts did through Friday's end but, all in all, Friday's market was rather supportive. Finally, cash cattle trade was noted in the South for $180 which is $1.00 to $2.00 higher than last week's weighted average. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.12 with a weighted average price of $79.14 on 2,962 head. December corn is down 2 1/2 cents per bushel and December soybean meal is up $6.10. The Dow Jones Industrial Average is up 62.44 points.

From Friday to Friday, livestock futures scored the following changes: October live cattle up $3.07, December live cattle up $3.25; September feeder cattle up $3.50, October feeder cattle up $4.50; October lean hogs down $1.52, December lean hogs down $0.15; September corn up $0.04, December corn up $0.02.

LIVE CATTLE:

It was a tremendous week for the live cattle complex and even though the spot and nearby contracts (October and December) closed slightly lower, the market's momentum continued well through Friday's end. Traders boldly supported the market this past week as they seemed to re-believe in the market's long-term bullish outlook. It's a little early for the fall run to be kicking off, but the excitement seen this past week in the market has everyone wondering if this year's fall rally will have started in the early part of September. October live cattle closed $0.42 lower at $183.22, December live cattle closed $0.07 lower at $187.42 and February live cattle closed $0.30 higher at $191.70. Throughout the day, the market saw some light trade develop in the South for $180 which is $1.00 to $2.00 higher than last week's weighted average. A light trade was reported in the North Thursday afternoon at $290, which is steady with the previous week, but sales were thin through Friday in the North.

Friday's slaughter is estimated at 125,000 head, 3,000 head more than a week ago and 3,000 head less than a year ago. Saturday's slaughter is projected to be around 51,000 head. The week's total slaughter is estimated at 559,000 head - incomparable to a week ago but 47,000 head less than a year ago.

Beef net sales of 11,900 mt for 2023 were down 34% from the previous week and 20% from the prior four-week average. The three primary buyers were Japan (4,100 mt), South Korea (2,100 mt) and China (1,600 mt).

Boxed beef prices closed mixed: choice up $1.24 ($312.90) and select down $0.12 ($286.05) with a movement of 107 loads (52.35 loads of choice, 19.08 loads of select, 13.18 loads of trim and 22.56 loads of ground beef). Throughout the week choice cuts averaged $313.48 (down $1.55 from last week) and select cuts averaged $287.34 (down $2.82 from last week) and the week's total movement of cuts, grinds, and trim totaled 535 loads.

MONDAY'S CATTLE CALL: Steady. Packers aren't willingly going to give the market anything as they know that this is their time to pump the brakes on the cash complex. Having said that, they could have to support the market more than they'd ideally like as they were passive in the cash arena over the past two weeks.

FEEDER CATTLE:

The feeder cattle complex had another strong day as traders thought their only option was to mildly support the complex given that cash cattle sales sold steady to $2.00 higher, the live cattle complex closed mostly higher and corn prices again rounded out the day lower. The spot September contract did close slightly lower, but the rest of the market rallied on the tremendous support that was seen this week from both the market's futures and fundamentals. September feeders closed $0.22 lower at $255.35, October feeders closed $0.27 higher at $259.15 and November feeders closed $0.35 higher at $260.62. The October contract did close at yet another new contract high for the contract! Most feeder cattle sales noted light receipts this week, which made it hard for weekly comparisons to be made. Strong tones were noted in the sales that did see large runs, but until late September, light receipts may be the tone of the market ahead of the fall run. The CME Feeder Cattle Index for Sept. 7: down $0.12, $249.21.

LEAN HOGS:

To no one's surprise, the lean hog complex let Friday's hours pass it by and closed lower as traders were unwilling to break through the market's resistance ahead of the weekend. Pork cutout values were able to close higher, but the cash market continues to trade thinly. October lean hogs closed $1.30 lower at $81.52, December lean hogs closed $0.82 lower at $74.45 and February lean hogs closed $0.62 lower at $78.55. Pork cutouts totaled 205.83 loads with 178.60 loads of pork cuts and 27.23 loads of trim. Pork cutout values: up $3.59, $97.80. Friday's slaughter is estimated at 474,000 head, 8,000 head more than a week ago and 7,000 head less than a year ago. Saturday's slaughter is projected to be around 348,000 head. The CME Lean Hog Index for Sept. 6: up $0.18, $86.19.

Pork net sales of 26,300 mt for 2023 were down 29% from the previous week and 13% from the prior four-week average. The three primary buyers were Mexico (8,500 mt), Japan (4,700 mt) and South Korea (3,300 mt).

MONDAY'S HOG CALL: Steady. At this point, packers show no interest in changing their buying strategy regarding the cash hog market.

Friday Midday Livestock Market Summary - Southern Plains Trades Cattle $1.00 to $2.00 Higher

GENERAL COMMENTS:

The cattle contracts are trading higher into Friday's noon hour while the lean hog contracts continue to trade lower. With the Southern Plains able to trade cattle for $1.00 to $2.00 higher this week, it's not surprising that the futures complex is trading higher given the strong fundamental support. December corn is down 2 1/2 cents per bushel and December soybean meal is up $4.30. The Dow Jones Industrial Average is up 109.49 points.

LIVE CATTLE:

The spot October contract is trading mildly lower but that's not keeping the rest of the live cattle contracts from trading higher. Feedlot managers in the South are pleased with their decision to wait the week out to trade cattle as prices are being noted at $180, which is $1.00 to $2.00 higher than last week's weighted average. Asking prices for cattle left on showlists remain at $180-plus in the South and $292-plus in the North. This week's volume in the cash market will be especially interesting to note on Monday when the week's data comes out. Both last week and the week before, packers had only mildly supported the cash sector, which could mean that they need to either get more aggressive Friday and get inventory built, or that they're going to need to do so next week. October live cattle are down $0.30 at $183.35, December live cattle are up $0.07 at $187.57 and February live cattle are up $0.27 at $191.67. There was some dressed trade reported Thursday afternoon in Nebraska and Iowa at $290, which is mostly steady with last week's weighted average.

Beef net sales of 11,900 mt for 2023 were down 34% from the previous week and 20% from the prior four-week average. The three primary buyers were Japan (4,100 mt), South Korea (2,100 mt) and China (1,600 mt).

Boxed beef prices are higher: choice up $1.89 ($313.55) and select up $0.29 ($286.46) with a movement of 62 loads (37.00 loads of choice, 8.07 loads of select, 10.26 loads of trim and 6.48 loads of ground beef).

FEEDER CATTLE:

The feeder cattle contracts are merely skipping into Friday's noon hour as the market joyfully notes the slight decrease in corn prices and the higher trade in the Southern Plains cash cattle market. September feeders are up $0.15 at $255.72, October feeders are up $0.67 at $259.55 and November feeders are up $0.65 at $260.92. Today's modest rally pushes the spot October contract to yet another new contract high. It will be incredibly interesting to see what feeder cattle prices do later this month when the big runs start to take off.

LEAN HOGS:

The lean hog complex isn't seeing the momentum nor support from traders that it hoped to see as the contracts drift mildly lower into Friday's noon hour. Midday pork cutout values are up big with the belly sporting a $16.19 rally, along with the ham's snappy increase of $9.60. All of the other cuts are trading higher as well, but their gains weren't as dramatic. It's likely that the market will close with this lackadaisical tone and wait for next week's market to decide if resistance should be broken through or not.

The projected lean hog index for Sept. 7 is up $0.08 at $86.27, and the actual index for Sept. 6 is up $0.18 at $86.19. Hog prices on the Daily Direct Morning Hog Report average $79.79, ranging from $74.00 to $84.00 on 2,188 head and a five-day rolling average of $79.58. Pork cutouts total 119.57 loads with 106.22 loads of pork cuts and 13.35 loads of trim. Pork cutout values: up $5.62, $99.83.

Pork net sales of 26,300 mt for 2023 were down 29% from the previous week and 13% from the prior four-week average. The three primary buyers were Mexico (8,500 mt), Japan (4,700 mt) and South Korea (3,300 mt).

Friday Morning Livestock Market Update - Cash Cattle Trade Comes Down to the Wire

GENERAL COMMENTS:

There has been very limited cash cattle trade so far this week. Some light trade took place in Nebraska at steady money with last week. Higher futures have provided confidence for feedlots to hold for no less than steady money ... and then some. It appears feedlots may win this week as packers will need to purchase cattle Friday. The offsetting issue is boxed beef prices have weakened as cattle futures have increased. Thursday, choice declined $1.91 with select down $1.44. Granted, packer margins have improved, but that does not mean they are willing to write larger checks. Feeder cattle made new contract highs across the board. Buyers continue to remain aggressive at auctions, looking for animals to put on feed in anticipation of a continued tight market and higher beef prices.

Lean hogs were higher, perhaps on some spillover trading activity; but that might have been very limited as there is a large difference between cattle and hog fundamentals. Traders may not be very apt to support the market Friday as cutouts fell Thursday and it is unlikely packers will pay more for hogs Friday. The National Direct Afternoon Hog report showed a gain of $1.13 to an average of $80.26. However, cutouts fell $4.12 and may trigger liquidation to close out the week. Weekly exports sales will be released Friday morning, but are not expected to have much influence on the market. Saturday slaughter is estimated at 344,000 head as packers intend to make up for being closed Labor Day.

	BULL SIDE		BEAR SIDE
1)	New contract highs in feeders may keep the momentum going as traders remain confident of more upside potential.	1)	The wide spread between live cattle and feeder cattle may not be maintained for very long. Feeders may run out of steam.
2)	No worse than steady cash cattle trade this week would support the market, providing more confidence that higher prices could be achieved next week.	2)	High beef prices may be near a level at which consumers may reduce purchases and seek more alternatives. This may be reflected in boxed beef prices.
3)	Hog futures continue to hold an uptrend, which will need to be supported by improving cash.	3)	Pork cutouts remain erratic with no solid support to cause prices to trend higher.
4)	A large Saturday slaughter should keep hogs from backing up in the market and indicates there is strong demand packers need to fulfill.	4)	Packers continue to find sufficient hogs for slaughter. This leaves packers less aggressive and only needing to pay higher prices one or two days each week.