Livestock futures are mixed Friday morning with narrow to moderate trading ranges as traders adjust to previous market swings from the week. A report-heavy afternoon is in store for all livestock markets with Cattle on Feed and Hogs and Pigs reports released at 2 p.m. CDT.
Morning activity has been generally quiet in livestock futures Friday, as traders focus on balancing previous market shifts with afternoon report expectations. This is the last chance for traders in cattle and hog markets to adjust to expectations ahead of the Cattle on Feed and Hogs and Pigs reports, both released after closing bell Friday afternoon. Early expectations are not pointing to any major changes from year ago levels, which has allowed markets to remain generally quiet Friday morning.
December corn is down 3 3/4 cents per bushel and December soybean meal is down $2.00 per ton. The Dow Jones Industrial Average is up 3 points with Nasdaq down 32 points.
Moderate pressure in live cattle futures is seen Friday morning as traders adjust positions ahead of the weekend and upcoming Cattle on Feed report. Pre-report estimates point to a 1.9% drop in on-feed numbers from year ago levels. This estimate would account for 11.17 million head of cattle in feed yards (1,000 head or greater size) at the first of September. A total in this area would mean increased on-feed numbers from Aug. 1 and indicate the seasonal low has already been set.
This could help focus market attention on breaking away from counter-seasonal market shifts seen during 2020 due to the COVID pandemic. The outlook for long-term supply tightness continues, but without a significantly lower on-feed number Friday afternoon, price levels are not likely to remain extremely bullish following the report. Cash cattle activity remains extremely quiet Friday morning with the bulk of business done Wednesday.
There still may be some late-week clean-up trade, especially in the North during the day Friday. But unless significant changes are seen in the market in the next couple hours, the tone of the market appears to have already been set. Trade in the North on a dressed basis developed from $193 to $198 per cwt with most trade seen at $198 per cwt. This is generally $1 per cwt lower than last week’s weighted average.
Live trade in the South developed at $123 to $124 per cwt, which is steady with last week. Asking prices on cattle still left on showlists remain at $198 in the North and $124 live basis in the South. Friday morning’s boxed beef prices are mixed in light trade, with choice cuts $1.31 lower at $304.29 and selects up $1.36 at $276.35 on a total count of 63 loads. Dow Jones estimated Friday’s cattle slaughter at 116,000 — 3,000 less than a week ago and 4,000 more than year ago levels.
Narrow losses have trickled into feeder cattle trade with the general tone extremely subdued in front of the Cattle on Feed report. Light to moderate pressure in corn and grain markets is limiting downside market shifts in feeder cattle compared to live cattle, although the move in outside markets is not enough to stimulate widespread buying at this point. Trade is likely to hover within a narrow range through the rest of the session, although the limited volume could still bring an outside chance of last-minute market swings just before closing bell.
The focus on this afternoon’s Cattle on Feed report continues to keep traders interested, although at this point most traders have already adjusted positions according to where they feel the report will lead the market in the near future. Trader estimates point to a 1% drop in placements during August compared to 2020. This estimate has the widest range of all Cattle on Feed categories, which could bring additional volatility to the market and less confidence in where report numbers will land. The CME Feeder Index was priced at $154.49 for Sept. 22.
Lean hog futures have quickly settled down following Thursday’s aggressive triple-digit rally. Morning trade has held a sideways pattern with prices mixed in a narrow range from 20 cents lower to 25 cents higher at midday. The lack of significant shifts in the market is due to focus on limited trade direction in most commodities at the end of the week following what has been a very volatile week, driven by turbulent moves in the stock market.
Traders continue to focus on the upcoming Hogs and Pigs report, which will be released at 2 p.m. CDT. The expectation overall hog numbers will see a 2% reduction from year-ago levels. A move in this range should not be a significant market mover as traders continue to focus on slightly lower hog herd sizes until the middle of 2022. Significant shifts in farrowing intentions through the end of the year will likely be an indicator of any sizable market adjustments in the near future.
Cutouts are up $9.57 at $113.86 Friday morning on 258.15 loads. Negotiated hog prices are $0.21 higher at $76.93 per cwt on 2,780 head. The swine/pork market formula price is listed at $89.58 per cwt. Dow Jones estimated Friday’s hog slaughter at 472,000 — 1,000 less than a week ago, while 10,000 more than year ago levels. The CME Lean Hog Index is estimated at $91.47 for Sept. 23.