Thursday was another strong day for the cattle contracts as support continues to grow and is allowing for the markets to have a commendable rally. As the market prepares for Friday, watching how the week's cash cattle trade will pan out is going to be interesting. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.31 with a weighted average of $61.70 on 8,017 head. December corn is down 3 cents per bushel and December soybean meal is up $0.20. The Dow Jones Industrial Average is up 139.16 points and NASDAQ is up 180.72 points.
LIVE CATTLE:
Live cattle contracts clung to the support that rallied earlier in the week in the feeder cattle market and moved nearby contracts $2.00 to $3.00 higher Thursday. December live cattle closed $3.30 higher at $107.97, February live cattle closed $2.67 higher at $110.37 and April live cattle closed $2.15 higher at $113.52. The higher trade has feedlots hopeful to market cattle for at least steady prices this week, if not slightly stronger. There was some light trade that took place Thursday afternoon in the South at $106, which is fully steady, and Northern cattle traded for $103 to $104, which was actually $1.00 lower than last week's weighted average. Southern cattle will keep a premium on Northern cattle for the short term as Northern supplies are greater than that in the South, and Northern packers have ample supplies already bought. Thursday's lighter slaughter is due to the fact that two plants in Texas had difficulties getting cattle into the plants as ice and snow made transportation difficult. Thursday's slaughter is estimated 114,000 head, down 6,000 head from last week and 4,000 head from a year ago.
Thursday's actual slaughter data isn't sharing the same kind of joyous news that the rest of the market is rallying upon. For the week ending Oct. 17, slaughter was robust, totaling 658,614 head, but the disappointing component is the increasingly larger weights. Steers gained another from the previous week; averaging 929 pounds, which is only 1 pound lighter than the industry's high in 2015 when steers weighed 930 pounds, and heifer weights continue to grow. For the week ending Oct. 17, heifers averaged 850 pounds, 4 pounds heavier from the previous week and 4 pounds over the all-time high in 2015.
Beef net sales of 18,900 mt reported for 2020 were down 13% from the previous week and 6% from the prior four-week average. The three primarily increases were for China (4,300 mt), Japan (4,200 mt, including decreases of 200 mt) and South Korea (4,200 mt, including decreases of 1,500 mt).
Boxed beef prices closed higher: choice up $1.53 ($207.32) and select up $1.65 ($191.23) with a movement of 156 loads (93.32 loads of choice, 18.39 loads of select, 24.77 loads of trim and 19.71 loads of ground beef). FRIDAY'S CASH CATTLE CALL: Steady. Depending on how the market cooperates Friday, feeders should be able to keep the market fully steady if not rally a little stronger in the South especially.
FEEDER CATTLE:
Feeder cattle contracts veered higher and pushed the market anywhere from $1.10 to $1.82 stronger at closing. November feeders closed $1.82 higher at $135.72, January feeders closed $1.40 higher at $131.35 and March feeders closed $1.45 higher at $130.97. In respect to cattle producers, thankfully Thursday morning's bullish export report didn't send corn contracts shooting through the roof, and actually nearby corn contracts closed $0.01 to $0.03 lower per bushel. At Ogallala Livestock Auction in Ogallala, Nebraska, compared to a week ago, steers and heifers sold far better. Steers sold anywhere from $2.00 to $8.00 higher and heifers sold $2.00 to $6.00 higher. The CME feeder cattle index for Oct. 28: up $1.02, $134.34.
LEAN HOGS:
While the cattle complex rallied throughout the day, the same can't be said for the lean hog market. Upon rallying to new highs, the market has hit resistance and is slow correcting from the recent run. December lean hogs closed $0.75 lower at $65.62, February lean hogs closed $0.60 lower at $65.60 and April lean hogs closed $0.42 lower at $68.32. Pork cutouts total 282.78 loads with 208.16 loads of pork cuts and 74.62 loads of trim. Pork cutout values: up $3.05, $87.57. Thursday's slaughter is estimated at 492,000 head, steady with a week and year ago. Wednesday's hog slaughter was revised to 485,000 head; butting the new week to date at 1,464,000 head. The CME lean hog index for Oct. 27: down $0.20, $76.27.
Pork net sales of 29,000 mt reported for 2020 were up 8% from the previous week, but down 24% from the prior four-week average. The three primary increases were for Mexico (8,400 mt, including decreases of 1,500 mt), Japan (6,400 mt, including decreases of 200 mt) and South Korea (2,900 mt, including decreases of 400 mt).
Thursday's actual slaughter data shared disappointing news for the week ending Oct. 17. Actual slaughter for the week was down 1.57% compared to the previous week, totaling 2,685,307 head. Live carcass weights averaged 290 pounds (steady with the previous week) and dressed carcass weights averaged 216 pounds (up 1 pound from the week before).
FRIDAY'S CASH HOG CALL: Lower. Seeing that's there's not much support in the lean hog market, packers will buy what they need but won't be in a hurry to support the cash market and get caught paying more for hogs on a down market.
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