GENERAL COMMENTS:
It was a mixed day for the livestock complex as cattle rounded out the week on a slightly lower note, but the lean hog complex closed higher as Thursday's support carried the market through Friday's end. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $3.27 with a weighted average of $85.08 on 3,016 head. December corn is up 8 cents per bushel and December soybean meal is down $4.20. The Dow Jones Industrial Average is down 500.10 points.
From Friday to Friday, livestock futures scored the following changes: October live cattle down $0.97, December live cattle closed $1.50; October feeder cattle down $4.17, November feeder cattle down $3.63; October lean hogs down $3.40, December lean hogs down $6.57; December corn up $0.01, March corn up $0.02.
LIVE CATTLE:
After closing higher Thursday afternoon, the live cattle complex was pressured to make a decision come Friday: keep with the slightly higher tone, panic and crash lower, or retrack slightly and wait until next week to make a decision. Upon seeing that the Quarterly Stocks report shared bullish news to the corn market, traders opted to let the live cattle complex drift modestly lower throughout the day. The move didn't pressure the recently developed support plane, which could signal that a new bottom has indeed been established. October live cattle closed $0.85 lower at $143.27, December live cattle closed $0.72 lower at $147.05 and February live cattle closed $0.70 lower at $150.65. The market faced obvious technical pressure from the economy's weakened state, but the market's fundamental side held its own throughout the week with cash cattle trading steady to $1.00 lower. Boxed beef prices continued to be pressured throughout the week, which expected to come at the cost of production as packers look to secure their margin, but Friday's estimated weekly slaughter reported production at 664,000 head, which is only 3,000 head less than a week ago and is 24,000 head more than a year ago. Throughout the week, Northern dressed sales have had a range of $225.60 to $233, mostly $228, which is $1.00 lower than last week's weighted average. Southern live cattle have been marked at $143, which is fully steady with last week's weighted averages.
Friday's slaughter is estimated at 115,000 head, 10,000 head less than a week ago and 6,000 head more than a year ago. Saturday's slaughter is projected to be around 42,000 head.
Boxed beef prices closed mixed: choice down $2.33 ($243.75) and select up $0.35 ($220.13) with a total movement of 74 loads (44.95 loads of choice, 15.05 loads of select, 3.04 loads of trim, and 10.97 loads of ground beef). The choice/select spread sits at $23.61.
MONDAY'S CASH CATTLE CALL: Steady. Given that packers were aggressive in last week's market and again in buying this week, it's likely because they're fully aware that fed cattle supplies are going to become incredibly thin in the weeks/months ahead. Packers will likely continue to buy week in and week out to pad their deferred delivery commitments.
FEEDER CATTLE:
Just when the feeder cattle market seemed to be gaining some support, Friday's USDA Quarterly Stocks report sent the market crashing lower yet again. The report drove feeder cattle lower when USDA said that corn stocks totaled 1.377 billion bushels (bb) on Sept. 1, which is 148 million bushels (mb) less than expected last month and the second lowest total in eight years. The news was enough to send the contracts back down to the market's newly found support plane, which next week's market is going to be pressured to either uphold or submit to. October feeders closed $3.15 lower at $174.17, November feeders closed $3.20 lower at $174.62 and January feeders closed $2.75 lower at $175.67. Oklahoma's Weekly Cattle Auction Summary shared that compared to last week, and throughout the entire state, feeder steers traded $5.00 to $10.00 lower and feeder heifers traded $6.00 to $12.00 back. Steer calves sold $5.00 to $10.00 lower and heifer calves traded $4.00 to $9.00 lower. Slaughter cows sold $3.00 to $7.00 lower and slaughter bulls traded steady to $3.00 cheaper. Feeder cattle supply over 600 pounds was 42%. The CME Feeder Cattle Index for Sept. 29: down $0.48, $175.46.
LEAN HOGS:
The cattle contracts closed lower Friday afternoon but that didn't put a damper on the lean hog market's momentum. December lean hogs closed $0.50 higher at $76.22, February lean hogs closed $0.35 higher at $79.42 and April lean hogs closed $0.52 higher at $85.30. From the added support that trickled into the market throughout Thursday's trade (strong export report and bullish Quarterly Hogs and Pigs report), the market could have potentially established a bottom after this week's gut-turning, descend. Packers have seemed to pull back production in the face of pressured pork cutout values, and mixed feelings about consumer demand in the months ahead. Pork cutouts total 285.60 loads with 248.98 loads of pork cuts and 36.62 loads of trim. Pork cutout values: down $1.21, $97.59. Friday's slaughter is estimated at 467,000 head, 8,000 head less than a week ago and 1,000 head less than a year ago. Saturday's slaughter is projected to be around 132,000 head. The CME Lean Hog Index for Sept. 28: down $0.46, $95.14.
MONDAY'S CASH HOG CALL: Steady. Packers showed considerable interest in this week's market and even bought hogs on Monday, which rarely happens! It's a mixed bag of what next week's market could bring as packers could be looking to fill their books for upcoming kills, but then again, with this week's aggressive buying, they could opt to be more passive.
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