GENERAL COMMENTS:
Active losses in lean hog futures have taken center stage once again Thursday morning. After breaking through initial support levels at midweek, nearby contracts have posted sharp losses from $2 to $2.50 per cwt as traders try to uncover renewed support. Cattle trade is much less volatile, but live cattle prices have dipped below early week lows and are also trying to find a sense of technical support before the end of the week. December corn is down 7 cents per bushel and December soybean meal is down $5.20 per ton. The Dow Jones Industrial Average is down 126 points with Nasdaq up 49 points.
LIVE CATTLE:
Live cattle futures have posted moderate to active losses Thursday morning with nearby contracts .85 to .97 per cwt lower in light to moderate trade. The lack of higher cash cattle trade during the week and beef values that have been steady at best are weighing on futures, which had focused on a potential market turnaround over the last week. Given that prices are still in the top 25% of recent trading ranges, technical support levels are going to be less of an issue, with more focus moving on fundamental support for live cattle and beef cattle markets. Cash cattle activity remains at a standstill following light to moderate developing in most areas. Trade this week has been steady with last week's market averages at $124 live and $196 per cwt dressed. It is very likely that additional cattle will be sold before the end of the week, but unless major shifts are seen in either futures trade or Friday's Cattle on Feed report, overall price ranges may be little moved. Asking prices on cattle still on showlists are at $126 and higher live basis and $198 and higher dressed. With cattle still left for sale, feeders seem confident they will get higher prices or they appear willing to hold them into next week. The Special Fed Cattle Exchange Auction held today listed a total of 2,430 head (Texas 1,284 head; Kansas 756 head; Nebraska 138 head; South Dakota 252 head), of which none actually sold. Reserve prices ranged from $121 to $126. Opening prices ranged from $119 to $122, high bids ranged from $121 to $124.25.
Thursday morning's boxed beef prices are higher in moderate trade, with choice cuts $0.44 higher at $280.47 and selects up $1.01 at $263.81 on a total count of 71 loads.
Dow Jones estimated Thursday's cattle slaughter at 120,000 -- steady with a week ago and 2,000 more than year ago levels.
FEEDER CATTLE:
Feeder cattle trade continues to hold its own Thursday morning, despite pressure in other livestock markets. Limited gains are seen in spot October contracts, moving prices back above the $156 per cwt price level. Although this level has very little technical market relevance, the ability to break away from the rest of the complex is helping add a sense of stability in feeder cattle that seems to be quickly evaporating in live cattle trade. Deferred futures are showing the most pressure, as continued concerns surrounding production costs and future demand. But given price level and recent market swings, feeder cattle markets may continue to hold within the currently wide trading range. Analyst expectations for Friday's cattle placements are at 101.4% year ago levels with a range of 98.8 to 103.3%. The ability for report totals to remain close to expectations may help to bring more stability to the entire complex. The CME Feeder Index was priced at $154.03 for Oct. 19.
LEAN HOGS:
Lean hog futures have seen aggressive selling Thursday morning. Following the inability to hold initial support levels at $77 per cwt over the past couple of days, significant liquidation started. The lack of China's involvement in pork purchases in the latest export sales report added to the weaker trend, allowing nearby contracts to trade $2 to $2.50 per cwt lower through most of the morning. Next support levels for spot December lean hog futures remain near $72 per cwt, less than $2 per cwt below current price levels. A move below these levels would essentially wipe out the aggressive market shifts seen over the last month, causing traders to once again search for any sign of long-term support. The lower supply data seen in September has little long-term impact if pork demand cannot be maintained. Weekly export sales for pork are listed at 20,900 metric tons (mt). This is viewed as generally bearish for the overall pork industry. Although total sales are not totally out of line with previous weeks, the continued lack of buyer support from China quickly gained traders attention. China weekly purchases were just 200 mt, although 4,100 mt of previously purchased pork was shipped last week. This is once again creating significant concern that overall pork demand may continue to struggle well into 2022. Wholesale pork prices surged higher following an aggressive gain in belly cuts of $47.17 per cwt. Cutouts are up $7.95 at $104.82 Thursday morning on 150.24 loads. Negotiated hog prices are $1.02 lower at $65.19 on 5,325 head on the morning report. Dow Jones estimated Thursday's hog slaughter at 478,000 -- 1,000 more than a week ago and 9,000 less than year-ago levels. The CME Lean Hog Index is listed at $85.89 per cwt for Oct. 20.
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