Hogs: You could look at Wednesday's apparent rejection of these high prices in futures as a last hurray before lower trade takes hold. However, the move comes just one day before the U.S. Department of Agriculture gives the next update on its view of this fall’s grain harvest.
There can be a strong correlation between hog and grain prices when grains are making big moves. Sharp corn moves can encourage changes to marketing of market-ready numbers affecting short-term hog production as well as breeding herd numbers.
Looking at the breakdown of Wednesday’s hog fundamentals, we cannot say something brand new sticks out. Cash hogs were higher, we still have a perceived hole in the short-term marketing schedule, and packers are filling orders for next month’s features. This leads us to believe the break in hog futures was traders getting out before the USDA's grain news.
We are still skeptical over the October contracts pricing here but are not ready to put money on that opinion.
Cattle: It was reported Wednesday that an injunction sought by meat packers in federal court to stop country of origin labeling was denied. They argued the move would drive up their costs and make tracking and proper labeling a problem.
This is good news for those on the live animal end of the spectrum as it puts an artificial barrier on live animal imports from other countries. U.S. fat cattle, feeder cattle, and calves will continue to carry a small artificial premium.
This announcement gave the market a mixed performance today. While there was an initial move higher based off this news, it did not hold long. For the short term, this market has adequate supplies of market-ready cattle numbers and only mixed demand for beef. While supplies will change, it may take until the end of the month to do so.