Thursday Midday Livestock Market Update - Faceoff Continues Between Packers and Feedlots

GENERAL COMMENTS

It's been a quiet morning throughout the cattle complex as all eyes are patiently waiting to see what the cash cattle market pulls off. If feedlots can accomplish moving the market higher, then the futures market will likely grow keen to trading higher again, but until cash cattle move traders are content letting the complex sit idle. December corn is down 5 3/4 cents per bushel and December soybean meal is down $5.60. The Dow Jones Industrial Average is down 99.03 points and NASDAQ is up 99.82 points.

LIVE CATTLE

Watching the clock pass time only draws more attention to the live cattle complex, especially to the cash cattle market. As the day passes by, feedlots are seeming to only grow stronger in their quest for more money. Packers have once again offered $128 throughout the five-state trading region and $202 in Nebraska for dressed cattle, but feedlots want more. Feedlots look at the strength that's helping pull boxed beef prices higher, they see how aggressive processing speeds have been this week and they know that packers are short bought -- all of which indicates they should be able to move the market higher again this week. Packers are trying to resist paying more money because as the market gets closer to breaking the resistance at $130 in the cash market, not only does the market stand to regain leverage, but feedlots will realize they can indeed demand more. The live cattle contracts are trading lower and seem to desire direction from the cash cattle market. December live cattle are down $0.82 at $130.80, February live cattle are down $0.52 at $136.12 and April live cattle are down $0.50 at $138.92. Asking prices are around $130 in the South, and $205 to $206 in the North.

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).

Boxed beef prices are higher: choice up $1.05 ($289.54) and select up $1.60 ($269.32) with a movement of 59 loads (32.99 loads of choice, 10.52 loads of select, 4.72 loads of trim and 11.26 loads of ground beef).

FEEDER CATTLE

Corn prices are $0.04 to $0.05 lower in their nearby contracts, the cash cattle market is drawing a hard line and demanding higher prices, and yet here we are, seeing the feeder cattle complex draw back as traders seem unsure of whether they can blow past the resistance at $160 or not. November feeders are down $0.70 at $158.47, January feeders are down $0.52 at $158.70 and March feeders are down $0.60 at $159.55. Feeders have the green light from the corn market to trade higher, but traders are patiently waiting to see what signal comes from the live cattle complex.

With the live cattle contracts pulling back and there yet to be lively action in the cash market -- the market is waiting for one side to give.

LEAN HOGS

The lean hog market is rallying upon seeing a rather supportive export report. With China having more than enough hogs to supply their needs, it was peculiar to see them as the second largest buyer in this week's market. Nevertheless, the boost from exports is helping drive Thursday's market, and given how volatile the market has been in finding support here lately, any support will gladly be taken. In terms of where the market sits fundamentally, packers haven't been as aggressive in the cash market today as they were earlier in the week, which could simply mean that they have enough hogs booked for the near future. Wednesday's afternoon pork cutout values came as a shock to the market, so be prepared for anything this afternoon as holiday buying can send markets chopping higher one day and then lower the next. December lean hogs are up $1.40 at $77.35, February lean hogs are up $1.27 at $79.82 and April lean hogs are up $1.02 at $83.70.

The projected lean hog index for Nov. 3 is down $0.38 at $78.32 and the actual index for Nov. 2 is down $0.34 at $78.70. Hog prices are lower on the National Direct Morning Hog Report, down $1.21 with a weighted average of $59.48, ranging from $59.00 to $61.75 on 4,848 head and a five-day rolling average of $60.45. Pork cutouts total 229.64 loads with 204.34 loads of pork cuts and 25.30 loads of trim. Pork cutout values: down $1.22, $99.22.

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).