Wednesday Closing Livestock Market Summary - Cattle Futures Rally Back From Sharp Losses

GENERAL COMMENTS

Cash cattle activity remains quiet midweek with packers becoming slightly more active through the day. Bids are seen from $108 to $110 per cwt live basis and $173 per cwt dressed. Although no sales have been reported, it appears that steady to higher money will be the focus by the end of the week. Asking prices remain at $112 and higher live basis, and $178 to $180 dressed. Activity on the Fed Cattle Exchange Auction report today listed a total of 919 head, with 230 actually sold, 386 head listed as unsold, and 303 head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 430 total head, with 230 head sold at $109.00, 105 head unsold, 95 head listed as PO ($109.00); NE 151 total head, with 0 head sold, 151 head unsold, and 0 head listed as PO; TX 338 total head, with 0 head sold, 130 head unsold, and 208 head listed as PO ($109.00); CO no cattle reported; IA no cattle reported; other states no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 768 head total, 230 head sold, with a weighted average price of $109.00; 1-17 day delivery 151 head total, no sales; 10-17 day delivery no cattle reported; 17-30 day delivery no cattle reported. According to the closing report, the national hog base is $1.78 higher compared with the Prior Day settlement ($53.00-$63.75) weighted average $62.13. The corn futures moved lower in light activity. December futures were 1 1/2 cent lower Tuesday. The Dow Jones Index is 158 points higher with the Nasdaq up 8 points.

LIVE CATTLE

Live cattle futures volleyed in a volatile and wide range Wednesday with early triple-digit losses giving way to strong buyer support. Even though the live cattle futures trade was not able to hold onto all of the buyer interest and price support at closing bell, most contracts closed steady to higher ($0.30 lower to $0.67 Higher). Traders continue to look for additional direction from both the cash market and outside market activity, which will be able to sustain the commercial interest that has so faithfully developed over the last several of weeks. Beef cut-outs: lower, $0.76 lower (select, $189.09) and down $0.40 (choice, $197.26) with moderate demand and moderate offerings (73 loads of choice cuts, 27 loads of select cuts, 16 loads of trimmings, 23 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady to $2 Higher. Activity in cash cattle trade remains sluggish going into Thursday morning with bids expected to redevelop in the same range as seen Wednesday afternoon. The light trade that developed on the Fed Cattle Exchange Auction is not enough overall movement to establish a good market trend, especially given the volatility of futures trade over the last couple of days. This will likely leave most cash business to be done late Thursday or sometime Friday as both packers and feedlot managers will become more active through the morning Thursday.

FEEDER CATTLE:

Trade Wednesday in the feeder cattle futures closed mostly lower following wild price shifts in either direction ($0.70 lower to $0.37 higher). The focus on buyers stepping back into the live cattle futures market in the last half of the trading session after triple digit losses swept prices sharply lower, has created increased volatility in all cattle trade. This softness seems to be evident in the feeder cattle futures midweek as traders try to hold onto a sense of stability in nearby contracts, while deferred futures have posted moderate to firm pressure as buyer support was unable to be sustained. CME cash feeder index for 10/17 is $155.26 up $0.20.

LEAN HOGS:

Lean hog futures quickly responded to the lack of buyer support seen during most of the Wednesday trading session, as prices surged higher with buyers making another aggressive push in the last hour of trade (Steady to $1.57 Higher). December contracts led the complex higher with a $1.57 per cwt rally, which moved futures to $63.70 per cwt at closing bell. The aggressive market strength through the complex continues to focus on underlying support in cash markets as traders look for additional support through the next several weeks. Carcass values turned firmly lower Wednesday with all but Ham prices eroding through the day. Pork cut-out: $73.88 down $0.93. CME cash lean index for 10/16: $61.00, up $0.76. DTN Projected lean index for 10/17 $62.21 up $1.21.

THURSDAY'S CASH HOG CALL:

Steady to $2.00 higher. Continued buyer support will develop in cash hog trade early Thursday with bids expected to be seen steady to $2 per cwt higher, although most bids are expected to be $1 to $1.50 per cwt higher. The underlying fundamental support holding across the complex, combined with the aggressive futures buying activity midweek is pointing to strong end of the week support. Thursday's slaughter is expected at 465,000 head with an expected Saturday run at 195,000 head.