GENERAL COMMENTS:
It's been a powerful day for the cattle market as live cattle closed higher and saw phenomenal cash cattle demand on the few head that traded. And the feeder cattle market closed significantly higher as the market finally caught a break from the corn market. Meanwhile, the lean hog complex veered lower, but pork cutout values did manage to round out the day higher. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.05 with a weighted average of $60.98 on 10,187 head. December corn is down 6 cents per bushel, and December soybean meal is up $8.10. The Dow Jones Industrial Average is up 138.79 points, and the NASDAQ is up 53.68 points.
LIVE CATTLE:
Again this week, packers are showing their hand early in the week as they have picked up some cattle in Texas for $128 -- which is $3 higher than last week's trade, and in Nebraska for $130, which is also $3 higher. We knew that packers were short-bought with their aggression in last week's market, but their willingness to move the cash market another $3 higher again this week only amplifies the fact that packers need cattle. There was only a handful of cattle that sold Tuesday afternoon, so come Wednesday, the market will most likely be met with feedlots who know they can get at least $3 higher and packers who are antsy to get cattle committed. Luckily, this rally is being met with both fundamental and technical demand, as the future market closed fully higher Tuesday afternoon and had no trouble in doing so. December live cattle closed $1.10 higher at $129.95, February live cattle closed $1.32 higher at $135.22, and April live cattle closed $1.45 higher at $138.17. Tuesday's slaughter is estimated at 122,000 head -- steady with a week ago and year ago.
Boxed beef prices closed mixed: choice down $0.20 ($287.38) and select up $1.74 ($266.13) with a movement of 114 loads (60.29 loads of choice, 36.51 loads of select, 7.45 loads of trim and 9.58 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Higher. Wednesday's trade should have no problem keeping the momentum of $3 higher, and if packers are really desperate, they may have to even push the market higher to get all the cattle they need.
FEEDER CATTLE:
The corn market's weakness lasted throughout the day, which made the feeder cattle contracts nearly burst at their seams while the live cattle market pumped the complex with support. November feeders closed $3.17 higher at $157.57, January feeders closed $4.30 higher at $157.02 and March feeders closed $3.77 higher at $158. With how strong the fundamentals are in the live cattle market, the feeder cattle contracts couldn't help but rally through Tuesday's trade once the pressure from the corn market subsided. At the Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week, feeder steers and heifers sold unevenly steady; steer calves traded $2 to $4 lower, and heifer calves traded $3 to $5 higher. Usually, heifer calves don't trade stronger than their male counterparts, but the market is starting to see more and more demand for young females as buyers know that if the Western half of the U.S. gets moisture this winter, producers will be buying back females to replace what they had to de-stock after this past summer. Thinking about the latter half of this week, so long as the corn market doesn't jolt higher, with fat cattle begging to trade higher than what they even accomplished last week -- the excitement in the feeder cattle market is likely to continue. And, technically, there's plenty of upside potential. The CME feeder cattle index 11/1/2021: down $0.30, $156.26.
LEAN HOGS:
The lean hog market settled with trading lower on the futures complex as traders saw the excitement that was developing in the cattle contracts and seemed to jump ship. But even though the lean hog contracts closed fully lower and cash prices were weaker, packers were aggressive throughout Tuesday. First, packers bought over 10,000 head in the cash market, which isn't typical behavior, especially when pork cutout values are volatile. And, secondly, there was a significant movement of pork cutouts Tuesday, and cutout values even managed to close higher with pretty steady gains throughout most of the cuts (loin up $1.16, butt down $1.24, picnic up $5.76, rib up $3.36, ham up $7.16 and bellies down $4.85). Pork cutouts totaled 412.49 loads with 381.31 loads of pork cuts and 31.18 loads of trim. Pork cutout values: up $1.77, $94.21. Tuesday's slaughter is estimated at 479,000 head -- 1,000 head less than a week ago and 12,000 head less than a year ago. Monday's hog slaughter was revised to 472,000 head, which is 9,000 head less than what was originally stated. The CME lean hog index 10/29/2021: down $0.73, $79.16.
WEDNESDAY'S CASH HOG CALL: Lower. Even though there was some positivity found in Tuesday's pork cutouts, there are still ample supplies of hogs available to packers throughout the countryside so their need to drive the cash market higher remains minimal.
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