Thomas Elwood: Early livestock commentary
Cattle traded in all areas Tuesday at $99.50 live, $0.50 lower from the top end of trade last week.
Dressed bids in Nebraska were up to $154, with no trade reported. The lower trade early in the week
surprised and dismayed bulls in the market, who had expected feedlots to hold out for at least steady
money this week. Many felt feedlots could have successfully forced packers to pay $100 or better again
this week if they had waited for another day or so. More cattle probably need to trade this week, though
some look for a quiet market today as feedlots regroup.
The choice cutout was up $0.67 at $163.6 last night, with the select up $.070 at $156.78. Volume was
even smaller than on Monday, with fewer than 100 loads of graded cuts traded. Most primals were
steady to firm again, but the market does appear to be losing some momentum. If packers pay
consistently lower this week for cattle, it will be much harder to push prices higher next week. Labor
Day demand is basically satisfied.
Cash hog market calls are mostly steady this morning, but with weakness still expected in the East.
Hog numbers are coming much more easily and weights are going up now that the weather has cooled in
the Midwest. Iowa/S. Minn barrow and gilt weights increased a full pound last week despite a bigger
slaughter. An even bigger cool front has pushed down overnight, bringing temperatures lower yet again.
Note Tuesday's slaughter may be revised downward due to a breakdown at one plant. The plant is back
up running today, and Tuesday's shortfall will be made up on Saturday.
The pork cutout gained $1.07 last night. Loins were quoted generally steady again, but parts of that
complex have strengthened this week, leading to a big bump in the overall cutout contribution. Butts
were 4 cents lower. Hams were not established, but reportedly are still tight and firm. Bellies were
Last night's CME weekly storage report showed an out-movement of 2.368 mill lbs compared to an
out-movement last year of 1.237 mill lbs. Stocks now total 2.941 mill lbs compared to 33.978 mill lbs
last year. At current rates of draw, the industry basically will be out of bellies in CME approved
warehouses as of the end of this week. We expect national warehouses to be in a similar situation in a
week or two. Fortunately fresh production is ramping up quickly, though belly prices likely will stay
firm until slaughter consistently exceeds the 2.1 mill head level.