GENERAL COMMENTS:
Friday's WASDE report was extremely supportive to the cattle complex and mildly supportive to the pork sector. As the livestock complex trades mixed into Friday afternoon, next week could trade higher yet again as support seems to be seeping into the market from nearly every angle. December corn is up 3 3/4 cents per bushel and December soybean meal is up $7.30. The Dow Jones Industrial Average is up 191.39 points.
LIVE CATTLE:
After an exhilarating couple of days, the live cattle complex is trading slightly lower in its nearby contracts heading into Friday afternoon, while the deferred months cling to slightly higher prices. The market's advancement came as the cash cattle market shot $2.00 to $4.50 higher, which gave traders all the fundamental support they needed to work the contracts higher. Usually, the live cattle market keeps a close eye on corn prices, even though market-ready fat cattle have limited days left on feed. But with the strong advancement in the cash market combined with strong trade in the boxed beef market and Thursday's supportive export report -- the live cattle market isn't batting an eye at Friday's 1- to 2-cent run in the corn market. August live cattle are up $0.15 at $140.45, October live cattle are up $0.17 at $144.92, and December live cattle are up $0.12 at $150.95. Throughout the week, cash Southern live cattle have traded for mostly $140, roughly $3.50 to $4.50 higher than last week's weighted average. And Northern dressed cattle traded for $229 to $230, which is $2.00 to $3.00 higher than last week's weighted average. Given that the market has already seen a big movement of cattle trade, it's likely that Friday only sees some light clean-up trade develop ahead of the weekend.
Friday's WASDE report shared supportive news for the cattle complex. The forecast for 2022 red meat and poultry production is slightly higher from last month as stronger beef and broiler forecasts offset the lower trend in pork and turkey. Beef production grew by 68 million pounds from a month ago, pushing 2022's total production to an estimated 27,990 million pounds as slaughter speeds have continued to run aggressively. Beef production for 2023 grew substantially from last month's report as an additional 325 million pounds were added, which puts the year's estimated production at 26,265 million pounds. Both the third and fourth quarters of 2022 saw increases from July's WASDE report as third quarter steer prices are expected to average $140 (up $1.00) and fourth quarter prices are expected to average $147 (up $2.00). The first quarter of 2023 saw a $1.00 increase as steers are expected to average $151, but the second quarter held steady for 2023 steer prices at $152. Beef imports in 2022 were reduced by 56 million pounds, while beef exports grew by 65 million pounds. Beef imports for 2023 saw no changes from July's report, but 2023's estimated exports grew by 40 million pounds.
Boxed beef prices are higher: choice up $0.22 ($263.32) and select up $2.34 ($239.80) with a movement of 49 loads (23.26 loads of choice, 7.48 loads of select, 7.71 loads of trim and 10.77 loads of ground beef).
FEEDER CATTLE:
As the corn market leans into its fourth consecutive day of higher trade, the feeder cattle market's attitude is lackluster. August feeders are up $0.17 at $180.12, September feeders are down $0.57 at $184.02 and October feeder cattle are down $0.40 at $186.45. Even while the live cattle market finds tremendous support this week having traded higher throughout its contracts and having seen a $2.00 to $4.50 gain in the cash market -- the feeder cattle complex is fixated on the corn market's surge as feedlots have no room in their breakeven equations for higher feed costs. Nevertheless, the market is expected to keep this grim tone through closing as the grain sector pushes higher prices into Friday's afternoon.
LEAN HOGS:
After rallying to new contract highs in several of the months, the lean hog complex is trading lower into Friday's afternoon as traders seem to be stepping away from the market ahead of the weekend. October lean hogs are down $1.17 at $99.90, December lean hogs are down $0.42 at $90.20 and February lean hogs are up $0.05 at $92.77. Friday's WASDE report shared supportive news for the third and fourth quarters of 2022 as the market will likely continue to see strong interest in cash market as market supplies are thin.
The projected CME Lean Hog Index is unavailable at this time. Hog prices are lower on the Daily Direct Morning Hog Report, down $0.63 with a weighted average of $118.14, ranging from $114.00 to $133.00 on 3,819 head and a five-day rolling average of $124.19. Pork cutouts total 222.55 loads with 206.91 loads of pork cuts and 15.63 loads of trim. Pork cutout values: down $0.01, $123.30.
Friday's WASDE report shared mixed news for the hog complex. Pork production in 2022 fell by 81 million pounds as pork production was lowered on the third quarter as market-ready hogs are in extremely short supply. With market-ready hogs being in short supply, quarterly price projections for both the third and fourth quarters of 2022 were raised from July's report. Hog prices in the third quarter are expected to average $85 (up $9.00) and fourth quarter prices are expected to average $69 (up $3.00). No changes were made to the price projections in 2023. Pork imports for 2022 fell slightly from July's report to 1,547 million pounds, which is 6 million pounds less than a month ago. Pork exports for 2022 were reduced slightly to 6,574 million pounds, down just 2 million pounds from a month ago. Both pork imports and exports for 2023 were unchanged from a month.
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