General Comments
Upon seeing strong pork export demand, the hog market shot higher pulling interest from the cattle contracts and consequently leaving them to trade lower throughout the rest of the day. Cash cattle trade is showing more interest as there are bids starting to surface, but feeders have yet to seal any deals. December lean hogs are up $2.20 at $66.775, December corn is up 1/2 cent per bushel and December soybean meal is down $0.90. The Dow Jones Industrial Average is up 90.67 points and NASDAQ is up 64.36 points. Heading into the afternoon, the livestock complex has had an uneventful day following Thursday's export report.
LIVE CATTLE
Live cattle contracts are left in the same boat as the feeder cattle market as traders have jumped ship and are liking the attention buzzing throughout the hog sector. October live cattle are down $0.17 at $110.00, December live cattle are up $0.02 at $113.12 and February live cattle are down $0.25 at $115.67. But following the strong trade that's developed earlier in the week for the live cattle market, Thursday's sideways trade isn't hindering the market too much at this point. The cash cattle market is starting to draw more attention as bids are coming in at $107 in Kansas and Texas, and dressed cattle are bid at $168 to $169 in Nebraska. Trade has yet to break out as feeders are hoping to work the market higher. It wouldn't be surprising to see trade develop throughout the afternoon and into Friday.
Beef net sales of 20,700 mt reported for 2020 were down 16% from the previous week, but up 14% from the prior 4-week average. The three primary increases were for South Korea (5,800 mt, including decreases of 500 mt), China (4,100 mt), Japan (3,700 mt, including decreases of 1,400).
Boxed beef prices are mixed: choice down $0.75 ($216.13) and select unchanged ($205.58) with a movement of 100 loads (48.05 loads of choice, 25.74 loads of select, 6.54 loads of trim and 19.44 loads of ground beef).
FEEDER CATTLE
A break in the corn market's rally has allowed feeders to trade mildly lower as oppose to sharply lower. October feeders are steady at $138.50, November feeders are down $0.27 at $137.57 and January feeders are down $0.55 at $135.77. As the hog market rallies upon seeing strong export demand, the interest in the cattle contracts simply dwindled as traders are balancing the fact of higher input costs and soon to be worried about an exuberant number of calves hitting the market for the fall run.
LEAN HOGS
It took some time, but the lean hog market finally saw the high export demand that so many believed would eventually surface. Thursday's strong export report sent the hog market trading higher and especially in the December contract. October lean hogs are up $0.30 at $77.17, December lean hogs are up $2.30 at $66.85 and February lean hogs are up $1.45 at $70.57. As the market answered one of the looming questions, "will export demand rise?," the market is now left to answer the question of, "what are pork cutout prices going to do as they've jumped higher and lower over the last three weeks?"
Pork net sales of 60,200 mt reported for 2020 -- a marketing-year high -- were up 52% from the previous week and from the prior four-week average. The three primary increases were for China (29,000 mt, including decreases of 1,200 mt), Mexico (16,400 mt, including decreases of 500 mt), Canada (4,500 mt, including decreases of 400 mt).
The projected lean hog index for 10/7/2020 is up $0.12 at $77.62 and the actual index for 10/6/2020 is up $0.09 at $77.50. Hog prices are higher on the National Direct Morning Hog Report, up $0.05 with a weighted average of $63.79, ranging from $60.00 to $65.76 on 3,995 head and a five-day rolling average of $63.81. Pork cutouts total 176.72 loads with 152.22 loads of pork cuts and 24.50 loads of trim. Pork cutout values: down $0.03, $95.15.
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