The cash cattle trade was typically restricted to the distribution of new showlists. Ready numbers appear to be larger in the South (especially Texas), smaller in Nebraska and about steady in Colorado. Overall, the pre-holiday offering appears to be somewhat larger than the previous week. According to the closing report, the national hog base is $0.18 higher compared with the Prior Day settlement ($33-$37.65, weighted average $37.22). Despite the announcement of a preliminary trade deal between Mexico and the U.S., corn futures only managed to close modestly higher. Apparently, bears focused more on the growing likelihood of a bumper corn harvest. The stock market closed significantly higher with the Dow up 259 points and the Nasdaq settled 71 higher.
Originally pressured by the negative on-feed report and follow-through selling, live contracts opened some lower. But such logic didn't last long. The live board soon turned higher on news that a new trade agreement with Mexico would soon be released. Buying enthusiasm per se was further fed by spillover enthusiasm from lean hog futures. And once the recovery ball got rolling, the technical trigger began to fire. The December contract managed to swing from below its 100-day moving average (i.e., Friday's close) to settle above its 40-day moving average. When the smoke cleared, live issues had closed 95 to 260 higher. Beef cut-outs: higher, up $0.31 (choice: $213.63) to $1.03 (select: $204.85) with moderate-to-good demand and light-to-moderate offerings (43 loads of choice cuts, 22 loads of select cuts, 31 loads of trimmings, 18 loads of ground beef).
TUESDAY'S CASH CATTLE CALL:
Steady. Activity on Tuesday should be typically quiet with bids and asking prices poorly defined. That said, preliminary discussion could start somewhat earlier this week if you assume that cash players would like to have biz wrapped up by Thursday in order to enjoy a long Labor Day weekend.
Feeder futures followed the same early-weakness-late-strength seen in the live trade. Issues ultimately settled 102 to 360 higher. On an estimated run of 5,400 head (up from 4,144 last week and 4,911 in 2017), Oklahoma City sold 600- to 800-pound feeder steers unevenly steady, but steers scaling over 800 pounds were marked $2-$4 lower. Feeder heifers sold $1-$3 lower. CME feeder index 08/24: $150.64, off $0.19.
Lean futures raced sharply higher Monday, settling 67 to 300 points in the green. Mexico represents a huge export market for U.S. producers, so it was hardly a surprise when bullish traders embraced the new replacement for NAFTA, at least a new trading vehicle between Mexico and the U.S. built to enhance red meat demand (no one seems to know at this point where Canada will land). The carcass value closed solidly higher, supported by better demand for loins, ribs and bellies. Pork cut-out: $64.99, up $0.81. Cash lean index: 08/23: $48.93, off $0.57 (DTN Projected lean index for 08/24: $47.79, off $1.14).
TUESDAY'S CASH HOG CALL:
Steady. Look for the cash trade in the morning to open with generally steady bids.
John A. Harrington can be reached at email@example.com
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