GENERAL COMMENTS:
With the livestock complex closing completely higher, there was a lot to take in from Wednesday's trade. The cash cattle market is yet to really trade cattle, as packers and feedlots are stuck in a standoff. The feeder cattle contracts have had their floodgates swung wide open as corn prices are drifting lower and the live cattle market only continues to grow in strength. The lean hog market is seeing holiday buying spark its market and drive pork cutout prices higher. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.30 with a weighted average of $60.68 on 8,447 head. December corn is down 9 cents per bushel and December soybean meal is up $3.60. The Dow Jones Industrial Average is up 104.95 points and NASDAQ is up 161.98 points.
LIVE CATTLE:
It's thrilling to see the futures market trending higher; it's encouraging to see boxed beef prices finding support and it's relieving to know that showlists are lighter. However, there is nothing better than a stand off between feedlots and packers. There were just a handful of cattle that traded throughout the day but by and large, feedlots are holding packers' feet to the fire and demanding more. Packers stepped to the market hoping to buy cattle live for $128 and dressed for $202 to $203, but feedlots didn't budge. Feedlots are firm in wanting $130 live and $205 dressed, and if these feedlots continue to support one another and don't weaken, these prices are completely attainable. December live cattle closed $1.70 higher at $131.65, February live cattle closed $1.42 higher at $136.65 and April live cattle closed $1.25 higher at $139.42. The support that the market has right now is truly unmatched as fundamentally the market is 100% ready for a rally and ready for feedlots to regain leverage, and technically traders see the upward potential. The continuous live cattle contract closed the highest it's been since June 2017 Wednesday afternoon.
Wednesday's slaughter is estimated at 122,000 head, steady with a week ago and 2,000 head more than a year ago.
Boxed beef prices closed higher: choice up $1.11 ($288.49) and select up $1.59 ($267.72) with a movement of 140 loads (63.58 loads of choice, 30.66 loads of select, 25.56 loads of trim and 20.51 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Full Asking Price. I genuinely believe that so long as feedlots don't undercut one another, their quest to obtain their full asking price is completely doable. Thursday's market is lining up to be another good one.
FEEDER CATTLE:
Sporting a $1.60 to $2.20 rally in the nearby feeder cattle contracts seemed to be a cakewalk for feeders as the corn market tumbled and lost $0.09 in their nearby contracts and the momentum in the live cattle sector is only growing stronger. November feeders closed $1.60 higher at $159.17, January feeders closed $2.20 higher at $159.22 and March feeders closed $2.15 higher at $160.15. The market could see some slight resistance at $160, but until the complex trades closed to that $162 market there shouldn't be much holding the contracts back. At Green City Livestock Auction in Green City, Missouri, compared to two weeks ago, steers and heifers sold $2.00 to $5.00 higher with some instances of even $7.00 to $9.00 higher (the $7.00 to $9.00 higher was mostly on steers weighing 450 to 650 pounds). There were several strings of unweaned calves that were offered throughout the day but in most cases quality triumphed health history as buyers were aggressive and simply wanted to get their orders filled. The CME Feeder Cattle Index for Nov. 2: down $0.61, $155.65.
LEAN HOGS:
Wipe your eyes and hold onto your hats because this pork cutout market is jumping around. Wednesday's afternoon close surpassed all expectation as cutouts closed over $6.00 higher. The push stemmed from the fact that hams alone were up $23.61 ($89.80). Early holiday buying is undoubtedly working its way into the market and while higher prices always "feel" good, this type of ping-pong jumping nature can wreak havoc on the market later. December lean hogs closed $1.70 higher at $75.95, February lean hogs closed $1.40 higher at $78.55 and April lean hogs closed $1.35 at $82.67. If Thursday's export report throws a curve ball into the market than the vigor that's surrounding the complex could crumble. Pork cutouts totaled 312.80 loads with 262.73 loads of pork cuts and 50.07 loads of trim. Pork cutout values: up $6.23, $100.44. Wednesday's slaughter is estimated at 480,000 head, steady with a week ago and 7,000 head less than a year ago. The CME Lean Hog Index Nov. 1: down $0.12, $79.04.
THURSDAY'S CASH HOG CALL: Steady. With there being some upward momentum in cutouts, the market may stand a chance at holding steady.
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