GENERAL COMMENTS:
Active buyer support actively moved into cattle trade during the last half of the day, with increased support seen in nearby and deferred contracts. Although traders remain concerned about short-term inventory levels burdening the cattle market, the focus on lower supplies long term is regaining traders' attention. Hog futures, on the other hand, are struggling to keep buyers interested as growing concerns of demand erosion continue to pressure price levels. Hog prices moved lower on the National Direct Afternoon Hog Report in active trade, falling $0.04 with a weighted average of $66.93 on 9,449 head. December corn is up 9 cents per bushel and December soybean meal is up $5.80 per ton. The Dow Jones Industrial Average is up 119 points and NASDAQ is down 18 points.
LIVE CATTLE:
Cattle futures regained composure during the last half of trade activity with firm underlying gains sweeping through the complex. October live cattle futures moved 95 cents higher, just shy of $126 per cwt once again. Although these prices were not able to break through last week's highs, the ability to test these price levels can be viewed as a success, given the growing uncertainty in the market this week. On feed estimates for feedlots as of October 1st are 99.3% year-ago levels. This would still account for a feedlot inventory level of 11.63 million head, and the second largest October inventory level on record. Traders are also optimistic that beef values will continue to stabilize, sparking potential additional support through the upcoming weeks. October live cattle closed $0.95 higher at $125.95, December live cattle closed $0.50 higher at $130.52 and February live cattle up $0.60 at $135.60. Cash cattle trade started to develop through the morning Wednesday and continued during the afternoon. By the end of the day, it is expected that trade activity will have been light to moderate with at least some activity in most areas. Live trade is reported at $124 per cwt in the North and South, with dressed trade in the North at $196 per cwt. These prices are steady with last week's average and could be enough to set the tone for steady money for the week. Asking prices on cattle still yet to be sold are at $126 and higher in the South and $198 to $200 dressed in the North. There is a push for higher prices through the week, but the lack of early support may limit upward movement of cash prices for this week at least. The Fed Cattle Exchange Auction Wednesday listed a total of 2,757 head, of which none actually sold, 362 were scratched from the auction and 2,395 head were listed as unsold, as they did not meet the reserve prices that ranged from $121 to $126. Opening prices ranged from $120 to $122, high bids ranged from $123 to $124. The state-by-state breakdown looks like this: Texas 1,137 total head, all of which went unsold; Kansas 1,299 total head, with none sold, 937 head went unsold and 362 were scratched from the auction; South Dakota 252 total head, all of which went unsold; Nebraska 69 total head, all of which went unsold.
Wednesday's slaughter is estimated at 121,000 head, 1,000 more than a week ago and 2,000 more than year ago totals.
Boxed beef prices closed mixed: choice down $0.85 ($280.03) and select up $1.27 ($262.80) with a movement of 128 loads (76.43 loads of choice, 19.93 loads of select, 7.13 loads of trim and 24.42 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Cash cattle trade started to develop Wednesday. Although there seems to be ample feeders holding out for potentially higher money later in the week, the trend over the past few weeks of prices set midweek gives less hope that active gains may develop over the next couple of days.
FEEDER CATTLE:
Feeder cattle prices rebounded midweek following a four-day market slide, which seemed to help rekindle buyer support in nearby and deferred futures. Following mixed trade early Wednesday morning, the evidence of more buy orders moving into the pressured market helped to instill additional gain and pushed deferred futures to triple-digit gains. Traders remain generally cautious given the upcoming cattle on feed report on Friday. Bad memories following the September report continue to haunt most industry watchers, with uncertainty of just how traders will react to any adjustments in placement numbers. It would not be out of character for placement numbers to be above analyst expectations, but for now, traders are focusing on rekindling underlying support through the cattle complex. October feeders closed $0.82 higher at $155.92, November feeders closed $0.50 higher at $159.35 and January futures closed $1.25 higher at $160.47. The CME Feeder Cattle Index for Oct. 19: $154.03, down $0.07.
LEAN HOGS:
Hopes of the lean hog futures market digging out of the early October market slide have been dashed, as firm selling has redeveloped in all contracts and broke through last week's lows. December futures have quickly broken below $77 per cwt with February closing below $80 per cwt following triple-digit losses in nearby contracts. The lack of underlying commercial trader support is also impacting the interest of noncommercial traders, who seem to be content on the sidelines at this point. Although it currently appears that September lows of are still safe as underlying support levels, the concern that additional market weakness in pork values and lack of export sales interest could add to the selling activity late in the week. December lean hogs closed $1.37 lower at $76.02, February lean hogs closed $1.22 lower at $79.22 and April lean hog futures closed $0.97 lower at $83.42. Pork prices worked lower following another day of volatile primal cut moves. An $18 per cwt rally in Ham cuts was overshadowed by a $28 per cwt loss in belly cuts. Pork cutouts totaled 397.40 loads with 355.11 loads of pork cutouts and 42.29 loads of trim. Pork cutout values: down $2.40, $96.87. Wednesday's slaughter is estimated at 478,000 head, 5,000 higher than a week ago and 15,000 lower than a year ago. The CME Lean Hog Index for Oct. 19: down $0.74, $85.89.
WEDNESDAY'S CASH HOG CALL: Steady. Despite stability in futures and pork values, it appears that cash values are still having a hard time turning the corner and posting consistent gains at this point.
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