DTN Closing Livestock Comments

GENERAL COMMENTS

Initial cash cattle bids started to develop Tuesday at $106 in the South and $173 in the North. It is expected that active cash trade will be delayed until the second half of the week, and potentially until the release of the cattle on feed report Friday. But with current bids, and aggressive asking prices of $112 in the South and $177 and higher in the North, steady money may be in order before the week is over. According to the closing report, the national hog base is $1.06 lower compared with the Prior Day settlement ($67.00-$71.50) weighted average $70.66.The corn futures moved lower in light activity. September futures were 3 cents lower Tuesday. The Dow Jones Index is 191 points higher with the Nasdaq up 83 points.

LIVE CATTLE

Triple-digit gains moved through most live cattle contracts ($0.72 to $2.02 Higher) with buyers focusing on strong support quickly moving into the feeder cattle market, as well as short covering activity that quickly developed across all live cattle contracts. October futures moved $1.87 per cwt higher to $107.72 per cwt with traders focusing on moving prices away from long-term support levels. The overall tone of the market remains extremely weak with the upcoming cattle on feed report expected to focus on growing supplies. This may limit long-term buying activity in the market. But the current gain could help to establish short term support over the next couple of weeks with traders looking for increased demand surrounding the Labor Day weekend. Beef cut-outs: lower, $0.73 lower (select, $190.89) to down $0.06 (choice, $193.03) with light to moderate demand and heavy offerings (67 loads of choice cuts, 35 loads of select cuts, 17 loads of trimmings, 18 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 lower. Although starter bids started to slowly develop through the day Tuesday overall market activity remains sluggish. The first indication of trade will likely be the Fed Cattle Exchange Auction Wednesday morning, although overall sales numbers are uncertain given the light trade over the last couple of weeks. Active feedlot trade is expected to be pushed off until the last half of the week.

FEEDER CATTLE

Aggressive gains quickly flooded into feeder cattle contracts early Wednesday morning with contracts drawing commercial buyers back to the table ($2.15 to $2.90 higher). The focus of traders turned to short covering activity with September contracts leading the market with a $2.90 per cwt gain. All nearby contracts closed above $142 per cwt, which may help to spark some additional buyer support through the last half of the week. CME cash feeder index: 8/21: $143.43, up $0.03.

LEAN HOGS

Lean hog futures closed mixed in a wide range ($0.80 lower to $1 higher) following additional strong market pressure in nearby contracts. The overall lack of support in market fundamentals led to technical pressure in nearby October and December contracts with October futures slipping below $64 per cwt, and December contracts to $59 per cwt. Each market remains below short-term support levels. The buyer activity seen in cattle trade helped to draw some commercial interest back into deferred contract months through the summer and fall of 2018, but this had very little impact in market support for nearby contracts. Carcass values shifted lower despite all primals except belly markets moving higher for the day. Belly prices fell a total of $12.24 per cwt, offsetting support from other primal markets Tuesday. Pork cut-out: $89.14 down $1.42.CME cash lean index for 8/18: $83.19, down 0.51. DTN Projected lean index for 8/21 $81.53, down $0.82.

WEDNESDAY'S CASH HOG CALL:

Steady to $2 lower. Continued cash market pressure is expected to develop midweek following additional pressure in futures trade and expected concerns that supplies will continue to be a growing concern. Most bids are expected to be $1 per cwt lower early Wednesday. Midweek slaughter expectations are set at 445,000 head with Saturday numbers pegged at 132,000 head.

Rick Kment can be reached at rick.kment@dtn.com

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