GENERAL COMMENTS:
Cattle futures continue to steal the spotlight. Feeder cattle futures are leading the market higher once again with November futures moving above $160 per cwt for the first time in a month, creating further evidence that recent lows are likely to have set seasonal support levels. This is drawing active buyer interest in both feeder cattle and live cattle contracts, which have previously remained on the sidelines waiting for additional market direction. Hog futures are higher but showing very limited support as traders try to bring stability to the market at the end of the week. December corn is down 1/4 cent per bushel and December soybean meal is down $1.50 per ton. The Dow Jones Industrial Average is up 529 points with Nasdaq up 237 points.
LIVE CATTLE:
Triple-digit gains developed in live cattle futures Thursday morning as aggressive triple-digit increases continued in feeder cattle futures. December live cattle futures are leading the complex higher with a $1.45 per cwt at midday as prices are in striking distance of $130 per cwt during late morning trade. The ability to break through initial resistance levels of $129.45 per cwt set Sept. 15, rekindled buyer support Thursday morning. Although prices still have a long way to move before testing long-term resistance, the continued support building in the market is pointing to seasonal lows being set in the cattle complex. This is not only expected to help sustain price gains in the near future, but will also likely draw traders back to the market who previously were waiting for additional market confirmation of higher prices. Cash cattle trade appears to be mostly done for the week following moderate to active trade seen in all areas Wednesday. It is possible some clean-up activity may continue over the next couple of days; but for the most part, needed cattle seem to have already been bought and price levels are likely in place for any additional deals developing before next week. Trade in the South on Wednesday developed at mostly $124 per cwt. This is steady with last week's Texas trade, but $1 higher than the weekly average in Kansas. Trade in the North is seen at $196 dressed basis. This is fully steady with last week. Overall, the tone of weekly cash trade appears to be steady to firm. But, like always, it will be Monday before overall totals are available and we see a weighted average in each area. It is still uncertain if these price levels will sustain the bullish expectations seen in futures trade over the last several days.
Thursday morning's boxed beef prices are mixed in moderate trade with choice cuts $0.30 lower at $286.32 and selects up $2.54 at $265.45 on a total count of 92 loads. Dow Jones estimated Thursday's cattle slaughter at 120,000 -- 1,000 higher than a week ago and 2,000 more than year ago levels.
FEEDER CATTLE:
Strong price support continued in feeder cattle futures Thursday. Triple-digit gains once again helped solidify the underlying support. October and November futures are holding gains of $2 per cwt or greater, with November futures breaking through resistance levels of $160 per cwt for the first time in nearly a month. The ability of November contracts to hold above this threshold at the end of the day and week will likely create significant follow-through buyer support from both commercial and noncommercial trade participants during the first half of October. Despite the focus on higher-than-expected cattle numbers during the last couple of months, the outlook for tighter overall cattle supplies once yearly totals are calculated is still pointing to a contracting beef herd. With strong underlying gains redeveloping in stock prices, less focus on dramatic economic pressure will only help support expectations of stronger beef demand through the next several months. Feeder cattle sales in Farmington, Missouri, reported moderate movement, but prices were listed steady to $4 per cwt higher compared to last week. Late-week sales are likely to see a moderate to strong boost from previous week levels as most of the pressure in feeder cattle markets peaked at the end of last week. Despite the expectation of increased feeder cattle numbers moving to market in the coming weeks, this could help validate that seasonal low-price levels were set during the last week of September. The CME Feeder Index was priced at $152.88 for Oct. 5.
LEAN HOGS:
Light buyer support is trickling into lean hog futures Thursday morning. The lack of positive news from weekly export sales is likely to have limited potential market gains, but following pressure over the last three trading sessions, further market pressure is limited. Traders appear to be finding market stability near the $90 per cwt in October futures while December futures have gravitated toward the $82 price levels. The ability to sustain current support at these price levels while overall inventory levels are likely to remain tight through much of 2022 could help to rekindle support in both cash and wholesale pork markets. But there is still uncertainty about overall buying patterns in domestic and global markets. Economic outlook and volatility in financial markets is likely to continue to play a significant role in overall pork demand through the end of the year. Total pork exports in the weekly export sales report reported 22,100 metric tons (mt) sold. Shipments were reported at 29,000 mt. This is viewed as bearish for overall pork export sales, as totals are cut nearly in half from last week's levels. China's lack of participation in pork purchases was obvious, creating some additional concerns through the entire market. Mexico once again was the largest pork buyer of the week with 16,000 mt, while China only purchased 200 mt. Shipments of previously purchased pork to China were slightly better with 4,200 mt shipped to the country last week. Although this is not expected to change the direction of the lean hog or pork market at this point, the lack of new sales at the end of September does sting and could limit follow-through support in the entire hog complex over the near future. Active gains in belly and loin cuts offset pressure in ham prices Thursday. Cutouts are up $3.19 at $116.05 Thursday morning on 179.26 loads. Negotiated hog prices are $0.17 lower at $69.86 per cwt on 5,589 head. The swine/pork market formula price is listed at $92.21 per cwt. Dow Jones estimated Thursday's hog slaughter at 476,000 -- 2,000 more than a week ago and 10,000 less than year ago levels. The CME Lean Hog Index is listed at $92.59 per cwt for Oct. 6.
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