GENERAL COMMENTS:
It was a slow, mostly uneventful Tuesday for the livestock complex. The most noteworthy and market altering news came from the day's WASDE report where cattle were met with a supportive report, but the lean hog market found a mixed message. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.37 with a weighted average of $58.66 on 10,565 head. December corn is up 3 1/4 cents per bushel and December soybean meal is up $10.70. The Dow Jones Industrial Average is down 112.24 points and NASDAQ is down 95.82 points.
LIVE CATTLE:
The live cattle contracts weren't content trading lower as the market seems to be begging to rally, and upon seeing Tuesday's WASDE report where higher beef production is expected along with higher fourth quarter prices and stronger exports, the market was able to close mixed as oppose to fully lower. December live cattle closed $0.10 higher at $132.20, February live cattle closed $0.42 lower at $136.70 and April live cattle closed $0.15 lower at $140.25. The market still sees excellent fundamental support, but traders are being cautious of rallying the futures complex ahead of seeing what this week's cash cattle market does. There was some light trade that developed throughout the day, but by no means did it establish a trend or set the tone for the week. Cash cattle trade isn't expected to develop until Wednesday at the earliest, but probably Thursday or Friday as feedlots are gunning for higher prices again this week. Tuesday's slaughter is estimated at 122,000 head, steady with a week ago and 1,000 head more than a year ago.
Boxed beef prices closed mixed: choice down $0.85 ($287.80) and select up $2.02 ($270.62) with a movement of 200 loads (127.75 loads of choice, 27.75 loads of select, 15.84 loads of trim and 28.58 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Higher. It's evident that packers need cattle and that they are close to the knife. Feedlots should be able to rally this market another $2.00 to $3.00 higher this week if they're willing to wait as they did last week.
FEEDER CATTLE:
The corn market's bullish finding in Tuesday's WASDE report, which showed a record-high corn yield of 177.0 bushels per acre (yield increased seen in South Dakota, Missouri and Kentucky), sent the corn contracts rallying while feeders drifted lower through Tuesday's close. As always, the question left to be answered and that will undoubtedly affect how long feeders stay down is, "how much more upside potential does the corn market genuinely have?" The corn market has strong bullish undertones, rallying its sector, which could cause feeders turmoil while feeders attempt to capitalize on the current cattle rally. Technically speaking, the feeder cattle contracts have room to rally before they near the resistance at $162 and then again at $166. Fundamentally, the market is being met with mixed demand as buyers are anxious to get their orders filled, but finding trucks remains problematic and feedlots must carefully budget input costs. November feeders closed $0.67 lower at $157.90, January feeders closed $0.50 lower at $159.80 and March feeders closed $0.37 lower at $161.02. At Tri-State Livestock Auction in McCook, Nebraska, compared to last week, steers traded steady to $5.00 higher and heifers were mostly steady but there were instances where they sold $8.00 higher on heifers weighing 500 pounds. The CME Feeder Cattle Index for Nov. 8: up $0.24, $154.86.
LEAN HOGS:
Tuesday's WASDE report came as a mixed bag for hog producers to sort through as the market is expected to yield higher product production than what was anticipated last month, but unfortunately, price projections for the fourth quarter fell and pork imports were higher along with few exports. So, long story short, along with the day's lower trending futures market and weaker cutout close, the hog market faces some challenges moving forward. Even though hog prices closed lower throughout the cash market, packers did buy aggressively in regard to sheer volume, which most likely stems from them anticipating somewhat stronger cutout values moving forward as the holidays near. December lean hogs closed $1.42 lower at $74.95, February lean hogs closed $0.62 lower at $78.75 and April lean hogs closed $0.47 lower at $83.55. Pork cutouts totaled 386.00 loads with 358.03 loads of pork cuts and 27.97 loads of trim. Pork cutout values: down $2.31, $92.55. Tuesday's slaughter is estimated at 478,000 head, 1,000 head less than a week ago and 13,000 head less than a year ago. Monday's slaughter was revised to 467,000 head, 10,000 head less than what was originally stated. The CME Lean Hog Index for Nov. 5: up $0.60, $79.29.
WEDNESDAY'S CASH HOG CALL: Lower. With packers having bought over 10,000 head, it's likely that they aren't as aggressive in Wednesday's market.
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