GENERAL COMMENTS:
Light trade is seen in all livestock futures Wednesday morning. The development of cash cattle trade in Texas at steady money is creating hopes that prices may continue to strengthen as the week continues. Cattle futures are mostly higher, offsetting early week softness, while follow-through pressure in hog markets has now moved through initial support levels. This could leave hog markets vulnerable to additional liquidation in the next couple of days. December corn is up 5 1/4 cents per bushel and December soybean meal is up $4.50 per ton. The Dow Jones Industrial Average is up 280 points with Nasdaq up 11 points.
LIVE CATTLE:
Trade is mixed in live cattle futures Wednesday morning. Traders are focusing on limited market movement at midweek. Nearby contracts are slightly above last week's lows, which may indicate traders trying to establish a more stable range. Analyst expectations for Friday's Cattle on Feed report are a 0.7% drop in overall on-feed numbers compared to a year ago. Marketings are expected to see the most significant drop, with 97.2% of last year's level reported in September. Traders are starting to adjust positions to these levels, but these shifts could be seen until closing bell Friday. Cash cattle interest is developing Wednesday morning. Bids are available in all areas with packers offering $124 live basis in the South and $125 live basis and $196 dressed basis in Nebraska. Light trade has developed in Texas at $124 per cwt, but it appears most feeders are holding out for higher money. The $124 per cwt trade is fully steady with last week's average. If the opportunity to move prices higher is there, now appears to be the time to make it happen. The Fed Cattle Exchange Auction on 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, which 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 morning's boxed beef prices are mixed in moderate trade, with choice cuts $0.37 lower at $280.51 and selects up $1.47 at $263.00 on a total count of 77 loads.
Dow Jones estimated Wednesday's cattle slaughter at 121,000 -- 1,000 more than a week ago and 2,000 more than year ago levels.
FEEDER CATTLE:
Traders in the feeder cattle complex are trying their best to regain market composure following early week losses. Most contracts are higher at midday, with the most active support seen in January and March. The focus on limited movement in live cattle trade, combined with uncertainty as to how the upcoming Cattle on Feed report will impact trade has helped draw buyers back into the market. But it is going to be a difficult task to push prices significantly higher over the next couple of days with markets likely to wander within a moderate trading range. Cash feeder cattle auctions continue to see increased volume, although price levels are unevenly mixed. Last week's national feeder cattle summary posted prices generally $2 lower to $3 per cwt higher with overall demand described as moderate to good. Variability of cattle being sold continues to be the biggest focus on price levels at this point. The CME Feeder Index was priced at $154.10 for Oct. 18.
LEAN HOGS
Moderate pressure is seen early Wednesday morning. This selling has left additional softness through the entire complex. Although losses for the day have been kept in check, the most recent shift lower has moved through support levels. December contracts have broken below $77 per cwt, while February contracts are at $80 per cwt. A close at these levels will offset recent market support and could open the door for additional underlying pressure over the next two weeks. Although limited stability is starting to emerge in cash and pork values, the lack of buyer support in the futures market may test further market lows over the upcoming days. Cutouts are up $1.74 at $101.01 Wednesday morning on 167.30 loads. Negotiated hog prices are $0.35 lower at $66.21 on 6,159 head on the morning report. Dow Jones estimated Wednesday's hog slaughter at 478,000 -- 1,000 more than a week ago and 12,000 less than year ago levels. The CME Lean Hog Index is listed at $85.89 per cwt for Oct. 18.
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