Monday was a wild ride for the cattle complex as both live cattle and feeder cattle markets used the market's new limits. Meanwhile, the lean hog market closed lower, but in a much kinder fashion. Hog prices closed $1.33 lower on the National Direct Afternoon Hog Report, with a weighted average of $60.57 on 3,985 head. December corn is up 3 1/4 cents per bushel and December soybean meal is up $5.70. The Dow Jones Industrial Average is down 410.89 points and NASDAQ is down 192.68 points.
LIVE CATTLE:
You could almost hear angst growing as cattlemen saw Monday's market fall before their eyes. The live cattle complex sank to prices not seen since the first of July in Monday's downward dive. October live cattle closed $3.15 lower at $104, December live cattle closed $3.47 lower at $105.15 and February live cattle closed $3.30 lower at $108.17. The board's weakness following last week's light cash cattle trade flustered some feedlots into sell Monday afternoon and, undoubtedly, for lower prices. A small sampling of cattle traded in Texas and Kansas for $106 and a very few cattle traded in Nebraska for $105. Monday's slaughter is estimated at 118,000 head, 1,000 head more than a week ago and year ago.
The purpose of the futures market is to mitigate risk, act as a protection tool and to forecast prices at some point later down the road. The problem with such vast limits is that the market is volatile day in and day out, regardless of what's happening fundamentally. Cattlemen can understand that, as the price of corn scales higher, feeder cattle prices are going to wane lower. But when a market moves in a volatile fashion due to fund related selling, producer's assets are at risk. With the market's new platform, cattle contracts sit ripe for day-trading havoc.
Boxed beef prices closed lower: choice down $0.29 ($209.74) and select down $1.68 ($191.84) with a movement of 114 loads (52.10 loads of choice, 30.41 loads of select, 12.23 loads of trim and 19.64 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Lower. This week's trade will be lower but, depending on how the board trades throughout the rest of the week, it could continue to potentially pressure the market.
FEEDER CATTLE:
Feeder cattle contracts came $0.05 away from closing limit lower in the November feeder cattle contact. The market traded lower throughout the day, but as the market has yet to really experience these new limits, Monday's trade was a tough pill to swallow. October feeders closed $3.50 lower at $134.60, November feeders closed $4.95 lower at $130.07 and January feeders closed $4.10 lower at $125.22. Monday's regression sent the feeder cattle market far below both the 40-day moving average ($139.90) and the 100-day moving average ($138.79).
At Sioux Falls Regional Cattle Auction in Worthing, South Dakota, compared to a week ago, yearling feeder steers sold steady to $5.00 lower, yearling heifers sold $3.00 to $5.00 mostly with instances of $5.00 to $10.00 lower on the 750- to 800-pound heifers. In week's past, the demand has been stellar for yearlings as their availability is becoming harder and harder to come by, but as the future's market closed sharply lower and as cash cattle sell lower to last week's prices, buyers are approaching the market with more caution. The CME feeder cattle index for Oct. 16: not available at this time.
LEAN HOGS:
Thank heavens that December lean hogs closed higher because with Monday's drastic trade in the cattle complex, livestock enthusiasts needed something positive. December lean hogs closed $1.62 higher at $71.42, February lean hogs closed $0.10 lower at $70.85 and April lean hogs closed $1.32 lower at $72.32. Monday afternoon's cutout value closed lower but thankfully slaughter remains to operate a full bore. The market's weakness seeped into the lean hog contracts but at manageable levels compared to the live cattle and feeder cattle contract's trade. Pork cutouts total 317.44 loads with 290.17 loads of pork cuts and 27.27 loads of trim. Pork cutout values: down $1.09, $98.10. Monday's slaughter is estimated at 488,000 head, 10,000 head more than a week ago and 2,000 head less than a year ago. The CME lean hog index for Oct. 15: down $0.26, $78.23.
TUESDAY'S CASH HOG CALL: Lower. Packers are working through hogs, but as they sit on ample supplies their need and willingness to dive into the cash market is minimal.
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