GENERAL COMMENTS:
Cattle futures moved into the driver's seat Wednesday with active pressure developing in deferred contracts as traders looked past current supply and demand issues and focused more on potential long-term market shifts. Triple-digit losses developed in deferred live cattle and feeder cattle trade, focusing primarily on spring and summer 2022 contracts. This shift not only created uncertainty in next year's price levels, but also limited any buyer support in nearby contracts Wednesday. Hog futures have continued the weaker market trend seen during the last week, although prices shifts have moderated significantly from active triple-digit losses over the last two days, as traders appear to be sincerely searching for underlying market support. Hog prices moved lower on the National Direct Afternoon Hog Report in active trade, falling $0.93 with a weighted average of $68.18 on 11,439 head. December corn is down 10 1/4 cents per bushel and December soybean meal is down $1.30 per ton. The Dow Jones Industrial Average is down 1 point and NASDAQ is up 105 points.
LIVE CATTLE:
Light to moderate pressure developed in nearby live cattle trade Wednesday with traders continuing to slowly adjust to Tuesday's WASDE report where beef production was increased from the previous month. Traders continue to slowly digest these livestock reports as it will continue to create a better outlook for market direction not only for fourth quarter production, but also potential price levels next year. Deferred futures took the brunt of selling pressure Wednesday with triple-digit losses seen in April through August contract months. This could continue to further erode long-term price expectations for live cattle for next year. Even though April contracts continue to hold a $14 per cwt premium over spot October contracts, this premium may see further erosion if the higher beef projections hold in future reports. October live cattle closed $0.25 lower at $124.77, December live cattle closed 0.25 lower at $129.00 and February live cattle closed $0.70 lower at $133.55. Cash cattle trade started to develop during the day Wednesday with Southern trade priced at $124 per cwt. Trade in the North is reported at $196 dressed basis and live basis $122 to $124 per cwt. This trade is generally steady with last week's levels. Asking prices remain at $125 to $126 live basis in the South and $198 and higher dressed in the North. Given the light trade reported, it is likely that some additional trade may continue to develop over the next couple of days, but it is very possible that there is enough business done Wednesday to set the tone for cash prices for the week. The Fed Cattle Exchange Auction Wednesday listed a total of 4,508 head, of which 272 actually sold, 192 head were scratched from the auction and 4,044 head were listed as unsold as they did not meet reserve prices of: $122 to $122.50. The state-by-state breakdown looks like this: Texas 1,357 total head, with 272 head sold at $124 to $124.50, 1,085 head went unsold, and none were scratched from the auction; Nebraska 718 total head, all of which went unsold; Kansas 2,308 total head, none sold, 2,240 head went unsold, and 67 head were scratched from the auction. Oklahoma 125 total head, all of which went unsold. The Fed Cattle Exchange has announced it will hold a special auction Thursday morning in addition to the normal weekly auction reported Wednesday.
Tuesday's slaughter is estimated at 120,000 head, 1,000 less than a week ago and year ago totals.
Boxed beef prices closed lower: choice down $1.05 ($280.02) and select down $2.65 ($258.70) with a movement of 171 loads (91.88 loads of choice, 29.07 loads of select, 17.39 loads of trim and 32.79 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. The light trade that developed in most areas Wednesday is steady with week-ago price levels. It is possible that there is enough business done to establish a good test across the majority of cattle country. Unless a major shift is seen in the market over the next couple of days, the overall tone of the market appears to have been set once again by Wednesday trade.
FEEDER CATTLE:
Feeder cattle trade led the cattle complex lower Wednesday as firm follow-through pressure in corn trade was unable to gain any significant support as traders turned the attention to beef market uncertainty and larger-than-expected beef supplies over the next several months. January through April 2022 contracts led the complex lower, posting triple-digit losses, and sparking additional uncertainty in nearby October November contracts. Given the $8 per cwt rally last week in spot month feeder cattle futures, a market correction is not a shock to the system, but the wild gyrations seen in cattle trade over the last three weeks is creating concerns that market emotion may overshadow fundamental or technical market factors in the near term. October feeders closed $0.92 lower at $157.65, November feeders closed $0.82 lower at $160.97 and January futures closed $1.32 lower at $161.45. The CME Feeder Cattle Index for Oct. 12: $154.26, up $0.11.
LEAN HOGS:
Light to moderate pressure once again developed in all lean hog futures through the last half of the trading session Wednesday. Even though hog markets are attempting to establish more stable price patterns as the week continues, the concern surrounding uncertain demand for pork in the upcoming months is overshadowing any optimism focusing on lower hog supply levels over the next nine months. December lean hog futures spent most of the session hovering on either side of unchanged, but pressure from surrounding contracts and lack of buy orders allowed prices to dip lower at the end of the session. Given current price levels, it is expected that traders are trying to find a more defined support level for fourth quarter trade. However, with the current variability in both pork prices and cash hog values, futures trade movements is becoming even less supportive over the last several trading sessions. October lean hogs closed $0.42 lower at $88.65, December lean hogs closed $0.02 lower at $78.15, and February lean hog futures closed $0.40 lower at $80.85. Pork prices bounced higher, driven by strong double-digit gains in ham cuts. Pork cutouts totaled 418.48 loads with 370.33 loads of pork cutouts and 48.15 loads of trim. Pork cutout values: up $2.47, $104.85. Wednesday's slaughter is estimated at 478,000 head, steady with a week ago and down 13,000 from a year ago. The CME Lean Hog Index for Oct. 12: down $0.81, $89.73.
THURSDAY'S CASH HOG CALL: Steady to $1 lower. Developing pressure in futures trade once again, combined with general unsettled movements in negotiated cash hog prices and pork cutout values over the last couple weeks, is limiting support for higher moving cash markets.
No comments:
Post a Comment