GENERAL COMMENTS:
Firm pressure across livestock trade developed early in the session with feeder cattle futures taking the brunt of market weakness by the end of the day. Lean hog futures seemed to focus more on position adjustments following aggressive market shifts higher over the last two days. It is uncertain just how much additional volume will develop over the next couple of weeks with month and quarter end likely to create light to moderate position adjustments, while other traders are comfortable with current positions and will likely remain on the sidelines until the dust settles. Hog prices moved lower on the National Direct Afternoon Hog Report in moderate trade, falling $0.13 with a weighted average of $74.51 on 5,595 head. December corn is up 6 1/2 cents per bushel and December soybean meal is up $1.70 per ton. The Dow Jones Industrial Average is up 250 points and NASDAQ is up 47 points.
LIVE CATTLE:
Live cattle futures continue to trickle lower in light but generally weaker trade Wednesday afternoon. Light buying support attempted to step into several contracts late morning, but this support was offset by renewed market pressure and concerns of further pressure in nearby and deferred trade. All nearby live cattle contracts continue to trade well below both 40-day and 100-day moving averages, creating further underlying weakness in technical factors. The potential that this may bring about further late month losses could continue to test short-term support levels already set in September. December contracts continue to hold a $5.28 per cwt premium over the October contract, but the lack of recent support and questions about tighter cattle supplies through next spring is keeping most commercial and noncommercial traders out of the market at this point. October live cattle closed $0.22 lower at $121.77, December live cattle closed $0.45 lower at $127.05, and February live cattle closed $0.50 lower at $131.82. Cash cattle trade started to develop mid to late morning Wednesday. Overall trade volume was termed as "light to moderate," but it appears there is enough volume in all areas to establish a steady trend and likely set the tone for the rest of the week. Live cattle sold in the
South at $124 per cwt, which is generally steady with last week's weighted average. Live cattle in the North are reported at $122 to $124 per, while dressed deals in the North are posted at $196 per cwt. Dressed trade is fully steady with last week. Asking prices on cattle are holding at $125 live and $198 dressed, as feeders are unlikely to q back away from these price levels. The Fed Cattle Exchange Auction Wednesday listed a total of 3,350 head, of which 611 actually sold, 1,459 were scratched from the auction and 1,281 head were listed as unsold, as they did not meet the reserve prices that ranged from $122 to $124. Opening prices ranged from $121 to $123; high bids ranged from $121 to $124. The state-by-state breakdown looks like this: TX 961 total head, with 494 head sold at $124, 467 head went unsold, none were scratched from the auction; Nebraska had 1,190 total head, none of which sold during the auction, 182 head went unsold and 1,009 were scratched from the auction as they were sold just before the auction started at $125; Oklahoma had 694 total head, none of which sold during the auction, 244 head went unsold and 450 were scratched from the auction as they were sold just before the auction started at $123 to $124; Kansas had 505 total head, with 117 head sold at $122.25, 388 head went unsold, and none were scratched from the auction.
Wednesday's slaughter is estimated at 116,000 head, 6,000 less than a week ago and year ago totals.
Boxed beef prices closed lower: choice down $4.23 ($297.33) and select down $2.57 ($271.78) with a movement of 158 loads (98.08 loads of choice, 28.94 loads of select, 14.23 loads of trim and 16.73 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Initial light to moderate trade seen in most areas Wednesday is steady with last week's average price in both the North and South. Even though additional trade is expected in all areas over the next couple of days, it is very possible that the tone of the market has been set for the week.
FEEDER CATTLE:
Triple-digit losses redeveloped in feeder cattle as traders reverted to pressure seen Monday and offset most, if not all of the gains that developed Tuesday. This renewed pressure in nearby contracts has broken through early week support levels in October contracts, moving to three-month lows. The potential for additional softness on the last trading day of September and end of the third quarter could lead to further late week pressure in nearby feeder cattle trade. September feeders closed $0.12 lower at $154.27, October feeders closed $1.50 lower at $154.62 and November feeders closed $1.77 lower at $155.27. The CME Feeder Cattle Index for Sept. 28: $154.66, down $0.15.
LEAN HOGS:
Following two days of active gains in nearby lean hog futures, traders focused on position taking with most contracts holding narrow losses at the closing bell. Spot October futures were the hardest hit, as continued variability in pork values and wide shifting cash hog values is limiting the optimism for short-term market moves. Other nearby contracts closed 22 cents lower to 2 cents higher as traders try to establish support at the new but higher trading range. Moves over the last week have offset the steady downward pressure seen during the first half of September. Even though hog supplies well continue to be tighter than most expected over the next year, there remains the looming question of being able to move the available pork supplies at the higher price levels. With China production continuing to ramp up and wide volatility in global economic markets, there are significant questions if pork can continue to be priced at current or higher levels and still maintain a similar share of the meat market. October lean hogs closed $0.87 lower at $90.80, December lean hogs closed $0.02 higher at $83.60, and February lean hog futures closed $0.22 lower at $85.77. Pork prices surged higher following the support seen in morning reports based on an aggressive gain in ham cuts. Ham prices moved $30.69 higher, creating volatile trade in wholesale pork markets. Other primal cuts have traded in a more typical, narrow price pattern. Pork cutouts totaled 329.09 loads with 269.67 loads of pork cutouts and 59.42 loads of trim. Pork cutout values: up $6.99, $115.11. Wednesday's slaughter is estimated at 475,000 head, 4,000 more than a week ago and up 8,000 from a year ago. The CME Lean Hog Index for Sept. 28: up $0.77, $92.92.
THURSDAY'S CASH HOG CALL: Steady. Despite early week support in futures trade, the fundamental side of the hog industry remains much less bullish. Wide market swings in pork values and variable procurement rates at plants are keeping packers cautious with cash purchasing. Early cash hog bids are expected to remain generally steady Thursday morning.
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