DTN Closing Livestock Comments

GENERAL COMMENTS

Cash cattle trade is still undeveloped, although packer interest has improved through the day Wednesday. Bids are seen at $168 to $170 per cwt dressed basis, although most bids are at $168 per cwt dressed. Live bids are holding at $106 per cwt. Asking prices are seen at $175 and higher dressed basis and $111 to $112 per cwt live. Trade is likely to be pushed off until sometime late Thursday or Friday, although some deals may trickle in through the evening Wednesday. According to the closing report, the national hog base is $1.46 higher compared with the Prior Day settlement ($40.00 to $50.00) weighted average $47.48. Corn futures are lower in light activity. September futures were 13 cents lower Wednesday. Dow Jones Index is 2 points lower with Nasdaq down 37 points.

LIVE CATTLE

Strong gains quickly focused on aggressive buyer support moving into feeder cattle futures. There continues to be some uncertainty as to how much follow through buying will develop but moves higher seem to be building confidence ($0.85 to $2.17 higher). October futures led the market higher with a $2.17 per cwt gain, with all other contracts posting firm market gains but unable to show aggressive market surges Wednesday. It is uncertain just how much additional buyer activity or support will develop through the upcoming days, although continued moves higher in October futures through the end of the week may break through short-term resistance levels at $112 per cwt. This would outpace August highs, and likely bring additional buyer support. Beef cut-outs: lower, $1.04 lower (select, $197.27) and down $1.28 (choice, $204.79) with moderate demand and offerings (77 loads of choice cuts, 31 loads of select cuts, 19 loads of trimmings, 36 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady to $1 higher. Cash cattle market activity is expected to slowly develop in the same direction seen early in the week. Bids are likely to be restated at $106 per cwt live and $168 to $170 dressed. Interest will continue to develop, although trades may not be seen until late in the week.

FEEDER CATTLE:

Surged sharply higher through the last half of the session ($1.32 to $2.50 higher). The aggressive market support has quickly redeveloped with September through November contracts holding gains above $2 per cwt. Sharp losses in corn prices have helped spark additional support in feeder cattle markets with traders accounting for the reduction in feed prices for cattle on feed. This may help to maintain overall market support, although the underlying volume behind the gains seems to be light to moderate, raising questions of the ability to maintain gains. CME cash feeder index for 9/11 is $152.63 up $0.53.

LEAN HOGS:

Lean hog futures appear to have gotten caught in the upward draft that swept through the cattle complex Wednesday (0.25 to $1.52 higher). This has helped spark some additional commercial buyer activity, although both commercial and investors remained active through the session. Triple-digit gains were seen in October through May 2019 contracts with overall support developing across the market. This has helped spark additional underlying activity that may be carried through the next couple of weeks. Futures trade, as well as cash markets, are closely focusing on the impact and direction of Hurricane Florence. This could have a major impact on the pork industry on the East Coast. Pork values are gaining more momentum through the week with firm support in all primals except rib cuts. Pork cutout values gained $1.62 per cwt, moving to $70.86 per cwt. CME cash lean index for 9/10 $47.55 up $0.55. DTN Projected lean index for 9/11 $48.49 up $0.94.

THURSDAY'S CASH HOG CALL:

$1 to $3 higher. Increased cash market support is likely to be seen through the next couple of days with most bids likely to be priced $1.50 per cwt higher early Thursday. Thursday runs are likely to 412,000 head. Saturday slaughter numbers are expected at 153,000 head.

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

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