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Thomas Elwood: Early livestock commentary

Agriculture.com Staff 09/20/2010 @ 9:11am

Showlists are expected to be even to a little smaller this week.  Feedlots remain extremely current.  

While weights have resumed their upward trend after a bobble in August, they remain well below year ago levels and below recent history.  Asking prices likely will start the week at $100.00-$101.00 live and $157 dressed or better in the north. 

Friday's Cattle on Feed Report was one of the bigger surprises in recent history.  The report showed placements during August up 7% from last year, above the highest pre report estimate, and well over the average of unchanged from last year.  The big placements were concentrated in calves and in the over 800 lb category, an odd sort of spread.  Marketings were about as expected.  The large placements put the number of cattle on feed up 3% against an average expectation of up 1%. 

The choice cutout was down $0.84 at $156.52 Friday night, with the select down $0.03 at $151.21. 

Beef values continued to slide last week as the choice cutout lost nearly $3.00.  The select was down about $2.00.  Loins took the biggest hit by far, with end cuts down just slightly.  Ribs were firm. The good news is that the discounting bought some volume.  Spot graded cut volume totaled 958 loads, the largest week since July.  Slaughter this past week was larger than expected, and that could back buyers off on pricing once again this week.

HOGS 

Cash hog market calls are steady, but with weak undertones.  Numbers and weights are increasing, but the industry is still falling short on numbers despite the cooler weather and larger runs. Slaughter this past week was only 2.164 mill head against expectations of 2.17 to 2.18 mill head.  If the hogs do not begin to "show up" in the next couple of weeks in enough numbers to bring slaughter well above 2.2 mill head, we will have to concede that they were never there in the first place.  This would continue the recent trend of the USDA overestimating available numbers in the Hogs and Pigs Reports.  This is particularly relevant since the September report will be released on Friday.  

The pork cutout lost $0.67 Friday night.  Hams broke hard last week. Not only did they run into resistance at the 90 cent level again, but Russia delisted Tarheel.  This, along with rising production, simply put too many hams into the pipeline.  It would not surprise us to see the market remain weaker into the end of the month as production increases seasonally.  Bellies remain at record high prices.  

The September Cold Storage Report, scheduled for release on Wednesday, is expected to show record small belly stocks as of the end of August. We are not sure when this market will break, but when it does, we look for a fairly steep decline in prices. Fresh pork values have struggled a bit with the increase in production, but October is national pork month.  We expect to at least see loins catch in here. 

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