DTN Midday Livestock Comments 08/09 11:29

DTN Midday Livestock Comments 08/09 11:29 Aggressive Hog Market Pressure Leads to Further Livestock Weakness Limit losses Monday morning in nearby lean hog futures continues to add uncertainty about the ability to sustain market stability in the hog complex, but also is creating some uncertainty in cattle trade. Rick Kment, DTN Contributing Analyst GENERAL COMMENTS: Limit losses Monday morning in nearby lean hog futures continues to add uncertainty about the ability to sustain market stability in the hog complex, but also is creating some uncertainty in cattle trade. Although there remains underlying support in boxed beef values, the question if fall meat demand will start to fade following the Labor Day holiday is causing some underlying pressure in both cattle and hog markets. There is expected to be even more focus on the direction of cash hog and cattle prices through the week, but movements in pork and beef cutout values will be of high interest to all traders over the next couple of days. December corn is down 2 3/4 cents per bushel and December soybean meal is up $5.20 per ton. The Dow Jones Industrial Average is down 76 points. LIVE CATTLE Live cattle futures have bounced back from early morning losses, although most contracts continue to trade 25 to 50 cents per cwt lower based on spillover pressure from the hog and corn markets as well as growing uncertainty of the ability of beef values to sustain recent gains. The strong triple-digit gains in choice cutout values last week created overall optimism, but traders are becoming more concerned that the upward surge may quickly lose momentum and tumble lower. Questions about where beef prices will land once Labor Day buying has wrapped up, and the industry moves to upcoming fall and winter demand, may create additional hiccups through the live cattle complex in the upcoming days and weeks. Cash cattle trade remains extremely quiet in all areas Monday morning with bids and asking prices still undeveloped. The light trade last week created questions if packers would become more aggressive earlier in the week than normal. As of this point, there is very little indication that packers will break away from normal routines, but the need to source additional cattle and stability in beef values could cause more interest over the next couple of days. Feeders are expected to focus on further advancement of cash values following the moderate $1 to $2 per cwt gains last week. This could create a wider gap between asking prices and bids once each side becomes more active. Monday morning's boxed beef prices are higher with choice cuts up $2.03 at $298.29 and selects up $2.15 at $279.24 on a total count of 44 loads. Dow Jones estimated Monday's cattle slaughter at 119,000, 1,000 higher than a week ago. FEEDER CATTLE September feeders are trading up $0.10 at $163.42, as feeder cattle futures have been able to stay away from the drama in the lean hog and live cattle futures through the morning, with prices bouncing on either side of unchanged through most of the morning. Slight pressure in corn markets is being offset by additional support in soybean and soybean meal markets, leaving very little directional changes for overall feed costs and overall long-term production costs for feeders being placed over the next few weeks. There will be more focus on feeder cattle auctions over the coming days, although overall demand for feeder cattle is likely to remain very strong, potentially adding to cash price levels. The CME Feeder Cattle Index was priced at $156.55 for Aug. 5. LEAN HOGS Limit losses are seen in lean hog futures trade Monday morning. The aggressive market weakness seen two of the last three trading sessions is adding to the underlying weakness in all lean hog futures trade. At midday, October futures are $3 per cwt lower at $84.60 per cwt with December through April futures $2.45 to $2.90 per cwt lower. The volatility and growing weakness in pork cutout values over the last several days is one of the main focuses of aggressive market adjustments. October futures have now fallen $8.50 per cwt from July highs seen just two weeks ago, but prices are still slightly above June support levels of $83.20 per cwt. If markets close limit lower, the potential for expanded trade limits Thursday could break through these summer lows, creating even more bearish market indicators in the coming days and weeks. The recent back and forth market shifts in pork cutout has added volatility to the market. Despite recent gains in morning price levels, the increased volume on the afternoon report is what traders put most of the attention on. Cutouts were up $5.71 at $129.38 Monday on 191.01 loads, following aggressive gains in ham and belly cuts. The ability to sustain this price support through the end of the day will be essential to spark renewed market support in all markets. Negotiated hog prices are lower on the National Direct Morning Hog Report, down $0.78 with a weighted average of $98.46. The national weighted average of the Swine/Pork Market Formula is $109.38. Dow Jones estimated Monday's hog slaughter at 459,000, up from 419,000 a week ago. The CME Lean Hog Index is estimated at $111.21 for Aug. 6. Rick Kment can be reached kmentrick@gmail.com (c) Copyright 2021 DTN, LLC. All rights reserved.