Firm support remains rooted in lean hog trade despite traders pulling back from aggressive early gains. The focus on potential progress in a trade deal between the U.S. and China has sparked hope through the complex.
Cattle trade remains weak with feeder cattle futures leading the complex lower Thursday morning.
Corn futures are higher in light morning trade with December up 2 cents. Stock markets are higher in active trade with the Dow up 440 points higher and the NASDAQ up 129 points.
Live cattle futures have slowly backed away from early morning lows, although pressure continues to hold prices under moderate-to-strong pressure. The December futures contract is leading the complex lower with a $1-per-cwt loss. October still remains within the sideways and range-bound price levels.
Aggressive losses have pushed the December futures contract to new lows, sparking technical weakness and likely end-of-week liquidation through the complex. Traders continue to focus on eroding cash market levels as well as recent gains in beef cutout values hurting beef demand in early September due to the higher price points.
It is unlikely that the wide gap between futures and wholesale beef values will be able to continue. But, as beef values fall, it is likely that additional pressure will sweep through the complex.
Cash cattle trade is starting to develop in the South Thursday morning with light trade in Kansas and Texas at $100 per cwt. This is $2 to $3 per cwt lower than last week, and although not enough to consider moderate-to-active trade, could set the tone for the week given weaker prices in the North Wednesday.
Bids are seen in Nebraska at $165 per cwt, although at this point, there is no indication of additional trade developing in these areas. Asking prices remain at $105 live in the South and $170 dressed in the North.
Boxed beef cutouts at midday are lower, down $0.84 (select) to down $0.67 (choice) with light movement of 56 total loads reported (37 loads of choice cuts, 14 loads of select cuts, no loads of trimmings, 6 loads of ground beef).
Firm pressure quickly developed in feeder cattle trade with the focus on light-to-moderate gains in corn futures Thursday morning. The pull away from recent market lows in corn trade puts more emphasis on just how vulnerable feeder cattle prices and the overall cattle market remain when it comes to production costs and feed costs.
Nearby feeder cattle prices have backed away from triple-digit losses seen early in the session, but still remain weak given lack of buyer interest and end-of-week position-taking possible following the early week rally.
October lean hog futures have posted moderate-to-strong losses late Thursday morning while active gains have been well rooted through the rest of the complex. The announcement of planned trade talks with China in October is bullish for the complex, but traders are backing away from previous optimism in spot October, as some traders hoped that talks and a potential deal would be completed sooner.
This is pushing the potential of any progress toward the end of the year or early 2020. Although this is encouraging news long term for the market, traders are proceeding with caution, as there is still a lot to work to be done before any trade deal is reached, let alone implemented and enforced.
Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.12 at $53.58 per cwt with the range from $49 to $57.00 on 4,362 head reported sold. Pork values posted active losses following pressure in picnic and belly cuts.
Pork cutouts slipped $1.48 per cwt at $71.38 per cwt with 208 loads traded. Lean hog index for 9/3 is $66.57, down $1.40, with a projected two-day index is $65.25, down $1.32.
- Rick Kment can be reached at firstname.lastname@example.org