GENERAL COMMENTS:
Packer interest improved Wednesday with bids becoming more evident in all areas. Live bids are from $109 to $110.50 per cwt, while dressed bids are developing at $173 to $174 per cwt. Asking prices are still well above these levels, at $113 to $114 live and $178 and higher dressed. It is likely most trade will be delayed until sometime Thursday or Friday. According to the closing report, the national hog base is $0.30 higher compared with the prior day settlement ($56.00-$64.00) weighted average $63.03. Corn futures are lower in light activity. December futures were 3/4 cent lower. Dow Jones Index is 26 points higher with Nasdaq up 33 points.
LIVE CATTLE:
Active buying interest moved into cattle futures with triple-digit gains in nearby trade ($0.65 to $1.65 higher). October and December futures led the complex higher with spot October moving to $113.87 per cwt following a $1.52 per cwt gain. December futures led the complex higher with gains of $1.65 per cwt, moving prices to $118.82 per cwt. Each of these contracts broke through short-term resistance levels set during the middle of September. Expectations are that follow-through support may develop during the end of the month. Beef cut-outs: lower, $1.92 lower (select, $192.95) and down $0.88 (choice, $204.85) with light demand and moderate to heavy offerings (92 loads of choice cuts, 37 loads of select cuts, 20 load of trimmings, 40 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL:
Steady to $1 higher. Bid and asking price negotiations are expected to continue early Thursday morning, picking up where packers and feedlot managers left off at midweek. Bids are likely to redevelop near $109 live and $173 to $174 dressed. Active trade is not expected until late Thursday or sometime Friday.
FEEDER CATTLE:
Strong triple-digit gains moved through most feeder cattle futures Wednesday ($0.42 to $1.82 higher). Aggressive underlying buyer support developed in all live cattle futures through the day Wednesday. News focusing on plans to open trade talks with Japan seems to have sparked some underlying buyer support. Japan continues to be a major importer of U.S. beef and beef products, creating some interest surrounding the potential to expand this relationship. Live cattle futures drove buyer support, although the most aggressive price support was in October and November feeder cattle futures with gains of $1.82 per cwt. This may spark some additional underlying support through the entire complex. CME cash feeder index for 9/24 is $157.83 up $0.53.
LEAN HOGS:
Firm pressure quickly developed through all lean hog futures with traders backing away from previous market support ($0.22 to $1.00 lower). Lean hog futures were pressured by deferred futures contracts with February through June contracts holding the most aggressive losses. The limited moves in front-month October futures have focused on the potential that currently known supply levels may be well in hand. The biggest question is: What will overall supply look like six months from now? A portion of the losses seen Wednesday is associated with traders trying to make pre-report adjustments in front of the Hogs and Pigs report, which will be released Thursday. It is not expected there will be significant substance in this report that will severely shift market direction, but the market still remains nervous, and is likely to focus on increased uncertainty through the rest of the week. Pork cuts continue to gain support on an overall carcass value, although primals were mixed in a wide triple-digit range Wednesday. Pork cutout values gained $0.42 per cwt, moving to $80.87 per cwt. CME cash lean index for 9/24 $62.05 up $1.20. DTN Projected lean index for 9/25 $62.05 up $1.70.
THURSDAY'S CASH HOG CALL:
Steady to $1.50 higher. Follow-through support is expected to redevelop through the cash complex with most bids expected $1 per cwt higher in firm trade volume. Thursday runs are projected to be 470,000 head with Saturday procurement rates seen near 217,000 head.
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