General Comments
Lean hog contracts tried rallying early Friday morning but upon absorbing the disappointing export report, the market has shifted lower to follow suit with the cattle contracts. It's been doggish week for the cattle contracts as lower boxed beef prices added pressure to the marketplace and lower cash cattle trade solidified the weaker mentality. Rising corn prices and lack of trader support also added stress to the feeder cattle contracts as they have traded lower throughout nearly the entire week.
December corn is up 1 1/4 cents per bushel and December soybean meal is down $4.10. The Dow Jones Industrial Average is up 236.04 points and NASDAQ is up 32.21 points.
LIVE CATTLE
Keeping with the week's lower trend the live complex tips into Friday's afternoon fully lower. October live cattle are down $0.52 at $107.25, December live cattle are down $0.82 at $108.72 and February live cattle are down $0.87 at $111.55. Feeling pressure from all angles; lack of support from futures market, lower boxed beef prices and a lower cash cattle market, the live cattle market has had a bearish week. Friday's cash cattle trade remains illusive as bids haven't surfaced. Following the modest trade earlier this week Friday's trade isn't expected to be more than some clean up trade here and there.
This week's export report shared that beef sales of 13,400 mt reported for 2020 were down 35% from the previous week and 31% from the prior 4-week average. The three primarily increases were for Japan (3,900 mt, including decreases of 200 mt), Mexico (3,100 mt) and South Korea (2,200 MT, including decreases of 300 mt).
Boxed beef prices are mixed: choice up $0.18 ($210.66) and select down $1.90 ($194.60) with a movement of 78 loads (40.82 loads of choice, 24.29 loads of select, 6.73 loads of trim and 5.83 loads of ground beef).
FEEDER CATTLE
As Friday nears the noon hour, the feeder cattle market is seeing sharper losses develop in deferred contracts. October feeders are down $0.62 at $138.30, November feeders are down $0.65 at $135.82 and January feeders are down $1.90 at $130.20. It's been a tough week for both the feeder cattle futures and for calves selling throughout the countryside. Traders have stepped to the sidelines as uncertainty seems to keep building. Cattle enthusiasts worry about rising corn prices, this week's weaker cash cattle market and long-term demand as COVID-19 restrictions hold the foodservice industry hostage. With a plethora of calves still left to market this fall, worries about supply heavily outweighing demand grow more and more prevalent.
LEAN HOGS
Early Friday morning the lean hog market shot over the $70.00 resistance plane but upon facing this week's export report, the market decided to scale lower. December lean hogs are down $0.47 at $69.40, February lean hogs are down $0.62 at $70.80 and April lean hogs are down $0.92 at $73.52. Even though the industry would have liked another robust export report, this week's pork demand has been stellar domestically. As we understand that there will be fluctuations throughout the markets, if both markets (domestic and international) can maintain a healthy need for pork through rest of the fourth quarter and into the first quarter, the market will be relieved as U.S. supplies are ample.
The projected lean hog index for 10/15/2020 is down $0.25 at $78.24 and the actual index for 10/14/2020 is up $0.25 at $78.49. Hog prices are lower on the National Direct Morning Hog Report, down $1.04 with a weighted average of $62.42, ranging from $58.00 to $66.00 on 4,823 head and a five-day rolling average of $62.76. Pork cutouts total 188.63 loads with 164.70 loads of pork cuts and 23.93 loads of trim. Pork cutout values: down $2.94, 98.48.
Pork net sales of 26,800 mt reported for 2020 were down 56% from the previous week and 43% from the prior four-week average. The three primary increases were for Mexico (11,900 mt, including decreases of 800 mt), China (5,200 mt, including decreases of 1,400 mt), Japan (4,700 mt, including decreases of 300 mt).
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