GENERAL COMMENTS:
Disappointing pork export sales to China may have been the motivator behind some of the selling pressure that exacerbated the downward trend in lean hog futures Thursday. And, without traders to step in as supportive buyers, the cattle markets fell as well. Hog prices closed lower on the National Direct Afternoon Hog Report, off $0.04 with a weighted average of $58.48 on 6,047 head. December corn closed down 3 1/4 cents per bushel and December soybean meal closed down $1.20 per ton. The Dow Jones Industrial Average is up 44.81 points and NASDAQ is up 90.72 points.
LIVE CATTLE:
Live cattle futures kept hitting voids of buying interest Thursday afternoon and collapsed lower each time, with the February contract, for instance, moving as much as $3.325 lower at one point. At the session's close, the December contract was down $2.40 at $108.25, the February contract closed down $2.625 at $110.525, and the April contract closed down $2.425 at $114.20. This futures weakness is at odds with the cash cattle market, which had some quiet business Thursday at generally unchanged prices compared to last week's $110 live in the South and $172 dressed in the North. Asking prices are around $111 to $112 in the South and $174 plus in the North. The upcoming Cattle on Feed report Friday afternoon is expected to show inventories that continue to run slightly above last year's numbers (average analyst guess is a 1.8% year-over-year increase). However, the raw numbers won't fully illuminate how much lighter some of the newly placed animals may be after a summer and fall of drought across much of cattle country. This week's Drought Monitor showed an intensification of drought in the South and a persistence of extreme and exceptional drought in large parts of the High Plains and West. Thursday's slaughter was seen at 119,000 head -- 1,000 fewer than last week but 4,000 more than a year ago.
Boxed beef prices were higher: choice up $1.86 ($237.70) and select up $0.27 ($213.89).
FRIDAY'S CASH CATTLE CALL: Steady to higher. Although the sudden volatility in futures prices may put packers in a frisky mood, the underlying fundamentals of beef prices and fairly current cattle supplies back up those who are asking for steady or higher prices.
FEEDER CATTLE:
Feeder cattle futures took a downward direction Thursday alongside the rest of the livestock class, but feeders' losses were relatively less severe. The November feeder cattle futures contract closed down $0.25 at $136.775, the January closed down $1.75 at $135.55, and the March was down $1.95 at $134.95. Thursday was the November contract's last trading day, with settlement on Friday, Nov. 20, so now it's the January contract that must keep an eye on the CME Feeder Index, at 137.38 from 11/17, to keep itself in line. Demand continues to be characterized as good or moderate at sale barns this week, and lighter calves are generally finding higher prices, like the 500- to 700-lb steers and heifers at Pratt, Kansas, Thursday which got a $3 to $5 improvement over last week.
LEAN HOGS:
A disappointing weekly export sales report which showed only minimal pork interest from China may have exacerbated the downward direction of lean hog futures trade Thursday morning, with electronic algorithmic trade sustaining that direction as the charts hit fresh fall lows and then stayed lower all afternoon. The December lean hog contract closed down $2.10 at $63.70, the February contract closed down $2.85 at $63.05, and the April contract closed down $2.55 at $66.225. Packers have been benefitting from a day-by-day trend of lower hog prices while pork prices have been generally moving higher. Pork cutout values: up $1.54, $79.22. Pork cutouts total 354.81 loads with 304.4 loads of pork cuts and 50.41 loads of trim. Thursday's slaughter was seen at 491,000 head -- 8,000 more than a week ago and 7,000 more than a year ago. The CME lean hog index for 11/17: down $0.41 at $69.32 and the DTN projected CME lean hog index for 11/18: down $0.55 at $68.77.
FRIDAY'S CASH HOG CALL: Lower. Day by day the weighted average prices have been pressured lower.
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