Friday Closing Livestock Market Summary - Cattle on Feed Report Bearish

GENERAL COMMENTS:

Cattle futures closed in positive territory as positioning ahead of the Cattle on Feed report dominated the day. October live cattle futures were lower for the week while December and later contracts improved, slightly maintaining a sideways range. Feeder cattle futures were not as fortunate with slightly lower prices for the week in all contracts. Cash cattle trade showed little activity with business being pushed to the extreme end of the week. Confirmed cash sales took place at $111. The August Cattle on Feed report was bearish with cattle on feed on Sept. 1 at 106% of a year ago, totaling 11.1 million head. This was at the top of the range of estimates and 0.7% above the average guess. This is the highest Sept. 1 inventory since the series began in 1996. Placements were at 107%, also at the top of the range of estimates and 4% above the average guess. Marketings were 100.0%, totaling 1.98 million head, and at the low end of the estimates, but nearly in line with the average trade guess. Corn futures closed 4.75 cents higher, increasing three consecutive days.

LIVE CATTLE

October live cattle posted lower lows all week while later contracts moved mostly sideways. December closed at the highest price since Feb. 20, while April made a new contract high. Much of the trading activity for the week was centered around the Cattle on Feed report due to cash activity being delayed to the end of the week. Beef cut-outs were $0.28 higher (choice, $204.80) and $0.20 lower (select, $194.70). Total loads were 104 (48 loads of choice cuts, 20 loads of select cuts, 15 loads of trimmings, and 21 loads of ground beef.

MONDAY'S CASH CATTLE CALL:

Cash trade will be nonexistent on Monday with showlists being distributed. Bids will be lowered $2-$3 as Cattle on Feed numbers are higher. Saturday slaughter is expected at 58,000 head.

FEEDER CATTLE:

Futures closed the day in the vicinity of where they traded much of the day. October feeders gained $0.80, closing at $158.07, with November up $0.65 at $157.80. The Commitments of Traders report showed fund traders adding 3,422 long position this week as well as adding 477 short positions. Commercial traders reduced longs by 217 contracts and added 87 short positions.

LEAN HOGS:

October lean hogs declined $0.95 as it took back some of its meteoric rise this week. October through February were $0.70-$0.95 lower, while later contracts were mixed. There is no total count on the number of hogs lost during Hurricane Florence, but the market is holding onto the uptrend of the futures market. Pork cut-out values gained $0.23, settling at $79.18, on 267 loads. DTN projected lean hog index for 9/20 is $59.09, up $1.65.

MONDAY'S CASH HOG CALL:

Steady to $1 higher. Stronger cut-outs and steady demand should keep packers active. Saturday hog slaughter is expected at 183,000 head.

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Friday Midday Livestock Market Summary - Traders Positioning Ahead of Report

GENERAL COMMENTS: 

The cattle complex is showing some strength with traders positioning themselves ahead of the Cattle on Feed report to be released this afternoon. Trade estimates are for on-feed at 105.5%, placements at 104.8% and marketings at 100.0%. The trading range so far for live cattle futures has shown a lower low and lower high for the October contract and sideways for other contracts. Corn futures continue to extend gains with December up 2 cents. The Dow is 94 points higher with the Nasdaq down 4 points.

LIVE CATTLE:

Futures are showing minor gains as traders position themselves for the Cattle on Feed report to be released this afternoon. The July report showed above-average placements and this is expected again for August. Placements are expected to be the largest since 2012. Cash cattle are negotiated at $175 on a dressed basis with live cattle live cattle bids remaining at $108 and offers $111.50 with limited business reported. Boxed beef cut-outs are mixed at midday, $0.46 higher (choice) and down $0.20 (select). Total volume reported is 52 loads (25 loads of choice cuts, 11 loads of select cuts, 6 loads of trimmings, and 10 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures are holding their own, trying to keep their head above water. Upside movement will be limited as feeder futures keep pace with live futures. Feeder steers have been lightly tested this week, but show a better undertone. The supply of feeders this week consist of 26% steers and 74% heifers. Steer prices range for $154.50-$165 with heifers ranging from $146.80-$150.

LEAN HOGS:

Although making new highs for the move Thursday, futures are struggling Friday. December and February are taking the brunt of selling with sliding carcass values. Front-month October, although lower, continues to hold gains well. Cash prices are lower on the National Direct morning cash report. The weighted average price is $0.49 lower at $57.88 per cwt with a range of $56 to $59. The National Pork midday report showed 156 loads selling. Carcass valued declined $0.62 per cwt at $77.58. Lean hog index for 9/19 is $57.44, up $1.45, with the projected two-day index at $59.09, up $1.65.

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Friday Morning Livestock Market Summary - Cattle Waiting on USDA

GENERAL COMMENTS:

After Thursday saw light trade in Nebraska and Iowa around $175, some cash business may trickle in early Friday, but it also seems likely that more will develop after USDA's Cattle on Feed report at 2 p.m. CDT. Dow Jones survey is expecting the Sept. 1 inventory to be up 5.3% from a year ago, based on a 4% increase in placements and even marketings. December cattle have been holding near $118 this week, just a dollar shy from their highest price of the year, helped by active demand and in spite of consistently higher on-feed numbers like the one expected later Friday.

Lean hog futures continue to claw back from their August lows, helped this week by a $5.60 gain in pork cutout values since Friday. December hogs are now near their highest prices in three months, but it is difficult to understand just yet what might push prices higher from here as U.S. hog supplies should still be ample for this year's demand. The next update of hog inventories happens to be scheduled for next Thursday, Sept. 27 and USDA will likely remind us there are plenty of hogs, but a surprise is always possible.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are still holding firm after breaking into new high ground last Friday, possibly putting shorts under stress.	1)	Select cuts of boxed beef are down a couple of dollars since Friday, possibly hinting at a pause in demand.
2)	Last week's beef export sales were decent, at 15,900 metric tons (mt), thanks to top buyers, Mexico and Hong Kong.	2)	December cattle are near their highest prices of 2018, a possible source of resistance.
3)	Pork cutout values continue to firm through the month of September with carcass prices up $5.60 since last Friday.	3)	December hogs have rallied $14 from last month's lows, but without a strong bullish argument, further gains may be difficult.
4)	Pork export sales had another good week, totaling 22,900 mt and are holding a 3% gain for the year in spite of trade war concerns.	4)	Next week's Hogs and Pigs report from USDA could bring about renewed selling, if it shows another quarter of ample inventories.

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Thursday Closing Livestock Market Summary - Cattle Futures Consolidate

GENERAL COMMENTS:

Cash cattle trade Thursday kicked off steady with last week, setting anchor prices ahead of the majority of the week's business to develop Friday. Asking prices are seen around $113-$114 in the South, and $180 in the North. Futures traders seem to have their guesses and positions already dialed in ahead of Friday's Cattle on Feed report, and trading volume was relatively light Thursday. Lean hog futures sustained their ongoing rally with $1.25 gains focused on the October contract. The national hog base has jumped higher then lower from day to day, now $4.44 lower Thursday, according to the closing report: weighted average $51.77. Corn futures were higher (6 3/4 cents) alongside sudden double-digit gains in soybeans, which will be vulnerable to disappearing again just as suddenly if it turns out China's suggested tariff reductions won't really apply to these markets. The Dow Jones Index is 260.22 points higher and the Nasdaq is up 80.47 points.

LIVE CATTLE

Live cattle futures pared recent gains and pulled back into a consolidation zone with $0.65 losses in the October contract but more limited losses in the summer contracts of only $0.02 to $0.08. Speculative traders have been actively positioning ahead of Friday's upcoming Cattle on Feed report, which is expected to show 105.5% of the number in feedlots last Sept. 1. But the bulk of that trading volume seems to have been made in previous sessions, and now the market will just "wait and see." A little cash business popped up Thursday just before the noon hour and prices have so far held steady with last week. The light trade noted Thursday took place in Nebraska and Iowa at $175 dressed. Beef cut-outs were stronger across the board: choice $0.76 higher ($205.01), select $1.29 higher ($195.47), with light demand and offerings (29 loads of choice cuts, 16 loads of select cuts, 13 load of trimmings, and 15 loads of coarse grinds).

FRIDAY'S CASH CATTLE CALL:

Steady. Asking prices are seen around $113-$114 in the South, and $180 in the North.

FEEDER CATTLE:

With the exception of some upward movement in the nearby September feeder contract, which will expire next week, futures were lower Thursday, with losses of $0.40 to $0.60. These deferred contracts may have been spooked by the suddenly higher prices seen in the feed grains markets Thursday. CME cash feeder index for 9/19 is $154.46, up $1.38.

LEAN HOGS:

October hog futures continued their upward surge Thursday with gains of $1.25, but 2019 contracts have been more reluctant to rally, and most closed the session with light losses. The sudden enthusiasm for buying nearby lean hog futures may have been tied to swirling ideas that China may soon reduce tariffs on some imported products from some countries, which could benefit U.S. pork export prices. In recent months, overall quantities of exported pork have been stronger than last year and stronger than a five-year average, but the demand from China specifically has suffered compared to 2017 numbers. Processing plants in North Carolina have been starting back up, with more to follow Friday. Certain primal values have been the highlight of the day-to-day surge in cutout values, and with bellies up $4.03 Thursday and loins up $2.11, the overall carcass value gained $0.56 to reach $78.95 per cwt Thursday. CME cash lean index for 9/18: $55.99, up $1.41. DTN Projected lean index for 9/18 is $57.44, up $1.45.

FRIDAY'S CASH HOG CALL:

Steady to $1 higher. Uncertainty remains for how willing the cash market will be to follow the excitability of the nearby futures market.

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