GENERAL COMMENTS:
Heading into Friday's trade, everyone will be eyeing the cash cattle market to see whether feedlots win this week's battle or if packers are able to convince them to take slightly lower prices than what they had originally hoped for. The market sits in a prime position for feedlots to demand the prices they are asking, but Friday's outcome will depend on how desperate packers are to get cattle. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.86 with a weighted average of $59.82 on 8,042 head. December corn is down 4 3/4 cents per bushel and December soybean meal is down $5.00. The Dow Jones Industrial Average is down 33.35 points and NASDAQ is up 128.73 points.
LIVE CATTLE:
After seeing the day's actual slaughter data, feedlots again are compelled to demand higher prices in this week's cash cattle trade. With steer carcasses dropping 4 pounds from the previous week, it's evident that front-end supplies are getting worked through at an aggressive pace. Thursday's market was quiet, with just a handful of cattle trading, so the week's standoff will continue into Friday. Thus far, Southern live cattle have traded for $126 to $128, which is steady to $2.00 higher, and Northern dressed cattle have traded for $202, which is $2.00 higher than last week. With how positive the market's fundamentals are, feedlots stand on solid ground and should be able to win this week's battle. December live cattle closed $1.02 lower at $130.62, February live cattle closed $0.80 lower at $135.85 and April live cattle closed $0.60 lower at $138.82. Thursday's slaughter is estimated at 122,000 head, steady with a week ago and 2,000 head more than a year ago.
Beef net sales of 16,700 mt for 2021 were down 13% from the previous week, but up 15% from the prior four-week average. The three largest buyers were South Korea (6,700 mt), China (2,800 mt) and Japan (2,200 mt).
Thursday's actual slaughter data shared that for the week ending Oct. 23, cattle slaughter totaled 661,974 head. For the week, steers averaged 918 pounds (down 4 pounds from the previous week) and heifers averaged 842 pounds (up 2 pounds from the week before).
Boxed beef prices closed higher: choice up $1.73 ($290.22) and select up $0.50 ($268.22) with a movement of 147 loads (94.56 loads of choice, 33.84 loads of select, 5.01 loads of trim and 13.61 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Higher. With how eager consumers are to get beef, and how current the market sits in terms of market ready cattle, feedlots should be able to get their full asking prices this week even though it will pain packers to cut into their own margins.
FEEDER CATTLE:
It was a lower trending day for the feeder cattle contracts as they desperately looked to the live cattle contracts for support, but with the standstill in the cash cattle market, traders in the live cattle sector were timid as well. November feeders closed $1.15 lower at $158.02, January feeders closed $1.05 lower at $158.17 and March feeders closed $0.82 lower at $159.32. All the fundamentals were ripe for the market to trade higher (especially with corn prices being lower), but until traders can see continued support from the live cattle contracts, they may sit quietly. At La Junta Livestock Commission in La Junta, Colorado, compared to last week, steers under 400 pounds sold steady, steers weighing 400 to 500 pounds sold mostly $8.00 higher with instances of $10.00 higher, and steers over 500 pounds traded $3.00 to $5.00 higher. Heifer calves under 650 pounds sold $3.00 to $5.00 higher while heifers weighing 650 to 700 pounds sold $2.00 to $3.00 lower. The CME Feeder Cattle Index for Nov. 3: up $0.16, $155.81.
LEAN HOGS:
From a technical standpoint, the lean hog complex closed higher and had a successful day as the nearby contracts all closed well over $1.00 stronger, but fundamentally the market isn't seeing the support it needs. After a wildly higher close Wednesday afternoon, the market closed lower Thursday afternoon as the hams lost most of what they gained on Wednesday, dropping $17.54, $72.26. Adding to the fundamental hesitation are the industry's slow slaughter speeds, which will eventually push carcass weights higher as well. December lean hogs closed $1.92 higher at $77.87, February lean hogs closed $1.62 higher at $80.17 and April lean hogs closed $1.42 higher at $84.10. Pork cutouts totaled 418.19 loads with 378.29 loads of pork cuts and 39.90 loads of trim. Pork cutout values: down $2.75, $97.69. Thursday's slaughter is estimated at 477,000 head, 6,000 head less than a week ago and 9,000 head less than a year ago. Wednesday's slaughter was revised to 473,000 head, which is 7,000 head less than what was originally stated. The CME Lean Hog Index for Nov. 2: down $0.34, $78.70.
Thursday's actual slaughter data shared that for the week ending Oct 23, hog slaughter totaled 2,606,376 head. Live weights averaged 288 pounds, and dressed weights averaged 214 pounds and both were steady from the week before.
Pork net sales of 45,700 mt reported for 2021 were up 55% from the previous week and 72% from the prior four-week average. The three largest buyers were Mexico (18,500 mt), China (16,000 mt) and Japan (3,500 mt).
FRIDAY'S CASH HOG CALL: Steady. It was encouraging to see such a strong export report for the hog market, but slower processing speeds will only clip through so many hogs.
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