GENERAL COMMENTS:
It was a brutal start to the week for the cattle complex as higher corn prices pushed both feeders and live cattle lower. The lean hog complex ran higher throughout Monday's market and hopes to keep the momentum through Tuesday. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $2.75 with a weighted average of $84.14 on 4,904 head and a five-day rolling average of $91.19. December corn is up 15 cents per bushel and December soybean meal is up $5.00. The Dow Jones Industrial Average is down 93.91 points.
LIVE CATTLE:
The live cattle market acted like it wanted to trade higher, but as time passed and the corn market's rally grew more aggressive, even the live cattle complex grew weak. October live cattle closed $0.62 lower at $144.70, December live cattle closed $1.05 lower at $147.00 and February live cattle closed $1.00 lower at $150.75. The cash cattle market didn't see any interest as packers are hoping the board's lower tone and the uncertainty that comes with war pushes feedlots into selling cattle for cheaper/steady prices, but feedlots are keenly aware that supplies of market-ready cattle are thin and that packers need more of them with the aggressive slaughter pace that they're running. New showlists appear to be mixed, higher in Kansas, somewhat lower in Nebraska/Colorado, and lower in Texas.
The majority of last week's trade took place on Thursday with Southern live cattle traded $143 to $144, which was steady to $1.00 higher than prior week's weighed average. Northern dressed deals ranged from $228 to $233, mostly at $230, however, which was $1.00 higher than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 98,683 head. Of that, 74% (73,323 head) were committed for the nearby delivery, while the remaining 26% (25,360 head) were committed for the deferred delivery.
Monday's slaughter is estimated at 128,000 head, 1,000 head more than a week ago and 10,000 head more than a year ago.
Boxed beef prices closed lower: choice down $1.44 ($244.63) and select down $2.31 ($213.82) with a movement of 150 loads (64.51 loads of choice, 46.23 loads of select, 22.62 loads of trim and 16.28 loads of trim). The choice/select spread sits at $30.81.
TUESDAY'S CASH CATTLE CALL: Higher. Regardless of what the board does, it's inevitable that supplies of market-ready cattle are going to become thinner moving forward, which should help feedlots hold prices steady if not push them even higher this week.
FEEDER CATTLE:
The feeder cattle complex struggled throughout Tuesday's market as the corn complex's rally pressured buyer's breakevens. Unfortunately, until the corn complex stabilizes, it's unlikely that feeders catch much of a break as monitoring cost of gains is the market's focus. October feeders closed $2.62 lower at $172.10, November feeders closed $2.75 lower at $172.87 and January feeders closed $2.32 lower at $174.27. At Joplin Regional Stockyards in Carthage, Missouri, compared to last week, feeder steers traded steady to $3.00 lower. Feeder heifers under 425 pounds traded $8.00 to $11.00 lower with heavier weights traded $3.00 to $5.00 softer. Feeder cattle supply over 600 pounds was 57%. The CME Feeder Cattle Index for Oct. 7: down $0.31, $174.61.
LEAN HOGS:
The lean hog complex took the opportunity to attract traders to its market while the cattle contracts waned lower throughout Monday's hours. The nearby lean hog contracts closed higher while the deferred months closed lower. December lean hogs closed $2.45 higher at $79.60, February lean hogs closed $1.05 higher at $81.00 and April lean hogs closed $0.70 lower at $84.70. Pork cutout values close slightly lower which was surprising given that bellies jumped $7.26 higher. Monday's slaughter was estimated at 488,000 head, but I will be shocked if that's not revised lower come Tuesday as packers haven't been running that aggressive as of late. Pork cutouts totaled 326.93 loads with 279.44 loads of pork cuts and 47.49 loads of trim. Pork cutout values: down $0.15, $101.39. Monday's slaughter is estimated at 488,000 head, 23,000 head more than a week ago and 14,000 head more than a year ago. The CME Lean Hog Index for Oct. 6: down $0.12, $92.65.
MONDAY'S CASH HOG CALL: Higher. Given that packers didn't show the market much attention throughout Monday's hours and that the futures market trended higher, it's likely that they'll show more interest come Tuesday.
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