Wednesday Closing Livestock Market Summary - Additional Selling Pressure Sweeps Through Livestock Complex

GENERAL COMMENTS

Cash cattle trade started to develop with live sales redeveloping around $117 per hundredweight (cwt) while dressed activity was seen at $187 to $188 per cwt. These sales are $2 to $3 per cwt lower than last week's price levels. At this point, additional trade is still needed to be done, but the current movement may be enough to set the tone for the week. The Fed Cattle Exchange Auction on Wednesday listed a total of 653 head, with zero actually sold, 309 head listed as unsold, and 344 head listed as PO (Passed Offer). The state-by-state breakdown looks like this: KS 242 total head, with zero head sold, 92 head unsold, 150 head listed as PO ($117.25); NE 217 total head, with zero head sold, 217 head unsold, and zero head listed as PO; TX 194 total head, with zero head sold, zero head unsold, and 194 head listed as PO ($117.50); 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: 653 head total, zero head sold; 1-17 day delivery -- no cattle reported; 10-17 day delivery -- no cattle reported; 17-30 day delivery -- no cattle reported. According to the closing report, the national hog base is $0.22 lower compared with the Prior Day settlement ($54.00-$60.50 weighted average $59.28). The corn futures moved lower in light activity. March futures were 1 cent lower Wednesday. The Dow Jones Index is 36 points lower with the Nasdaq up 13 points.

LIVE CATTLE

Most live cattle futures saw triple-digit losses following the sharp tumble in feeder cattle trade ($0.52 to $1.27 lower). The combination of lower cash cattle trade, weakness in beef values through the morning and outside market pressure led early narrow market moves to develop into sharp pressure as closing bell approached. This may spark some additional late-week market liquidation that could further depress nearby and deferred contracts over the next couple of days. Beef cut-outs: lower, $2.52 lower (select, $184.11) and down $2.68 (choice, $206.40) with moderate-to-good demand and moderate offerings (82 loads of choice cuts, 45 loads of select cuts, 19 loads of trimmings, 23 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady with Wednesday's trade. It is uncertain just how much additional cash cattle trade will develop through late afternoon and during the evening, but the tone of the market is likely set given the pressure in futures trade. With prices generally $2 to $3 per cwt lower than last week, feeders will focus on the strong pressure in futures markets as they assess the opportunity to let cattle go at lower prices.

FEEDER CATTLE:

Strong price pressure has developed across the feeder cattle market for the second straight session ($1.65 to $2.02 lower). Even though traders pushed price levels off of session lows, the overall lack of support in the market continues to create additional market pressure and draw increased liquidation to all cattle markets. Front-month futures have fallen nearly $10 per cwt in the last week, creating widespread concern through the market. CME cash feeder index for 12/05 is $156.11 down $0.19.

LEAN HOGS:

Strong price pressure redeveloped across most of the hog trade with the combination of fundamental pressure and spillover selling from the cattle market pushing prices lower ($0.22 to $1.55 lower). The most aggressive pressure developed in February through May contracts as February futures pushed price levels below $70 per cwt. This move may start to erode previous support seen in November as traders have now taken out the test of support seen through the end of last month. Although there still remains a focus on growing demand, further market correction may develop. Carcass values tumbled sharply lower with losses in all but rib and belly markets. This caused increased pressure across the complex through midweek. Pork cut-out: $82.75 down $2.03. CME cash lean index for 12/4 $64.35, up $0.43. DTN Projected lean index for 12/05 $64.85 up $0.50.

THURSDAY'S CASH HOG CALL:

Steady. Despite the continued pressure in futures trade and overall softness starting to develop in pork values, cash markets are expected to remain mostly steady through the next couple of days. Packers will continue to fuel the aggressive procurement levels seen through the week, as hogs continue to be available. Thursday's slaughter is expected at 465,000 head with an expected Saturday run at 215,000 head.