GENERAL COMMENTS:
It was a strength-gaining day for the livestock complex as the three livestock markets closed higher and saw excellent support in the cash hog market, and even though it was mildly tested, the cash cattle that did sell sold higher. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.22 with a weighted average of $92.99 on 18,469 head. December corn is up 1 cent per bushel and December soybean meal is down $3.00. The Dow Jones Industrial Average is down 42.45 points.
LIVE CATTLE:
It wasn't a day where price jumps $3.00 to $4.00 higher and everyone hoot and hollers that the market accomplished something, but in the same sense, the market quietly added position to its price points and gained leverage in the cash market, which is worthy of some spirited noise, October live cattle closed $0.47 higher at $144.67, December live cattle closed $0.42 higher at $147.92 and February live cattle closed $0.50 higher at $151.75. The cash cattle market saw some light trade develop in Eastern Nebraska at $230, which is $1.00 higher than last week's weighted average. A few bids were offered in the South (mainly at $143.00) but with feedlot's asking prices firm at $145, Southern feedlot managers let the bids roll by and are waiting for better offers. Packers are keenly aware that fed cattle supplies are only going to become thinner in the months ahead, which is why they're aggressively buying now to pad and protect themselves against the rally that the cash cattle market could sport later this year. Feedlots have pressed their heels in the ground and seem uninterested in stomaching lower bids. More money will need to be offered if packers are going to get many cattle bought this week.
Wednesday's slaughter is estimated at 128,000 head, 1,000 head more than a week ago and 7,000 head more than a year ago.
Boxed beef prices closed lower: choice down $0.98 ($247.06) and select down $2.69 ($219.22) with a movement of 169 loads (99.91 loads of choice, 41.57 loads of select, 12.00 loads of trim and 15.91 loads of ground beef). The choice/select spread sits at $27.84.
THURSDAY'S CASH CATTLE CALL: Higher. Given that feedlots aren't taking the initial offers packers have presented, it's likely that packers will up their bids by at least a $1.00 or $2.00 to get cattle bought.
FEEDER CATTLE:
At midday, the feeder cattle complex was trading higher but doing so while having to keep a close eye the corn complex as it was trading $0.03 to $0.04 higher. As the afternoon's hours ticked by, the corn complex closed with only a one- to two-penny gain seen in its nearby contracts, which allowed for feeders to push $1.00 to $2.00 higher through the day's end. October feeders closed $1.90 higher at $176.55, November feeders closed $2.12 higher at $177.32 and January feeders closed $2.00 higher at $178.07. The tone throughout the countryside is supportive as buyers are seeming more interested in both feeders and calves. Given the drought related pressures that have forced producers into marketing their cattle earlier than normal, one must wonder if this year's fall run (which is usually the last week of September through the month of October) will get as many receipts as last year. At OKC West Livestock Auction in El Reno, Oklahoma, compared to last week, on a run of 7,084 head, feeder steers sold steady to $3.00 higher. Feeder heifers traded $1.00 to $3.00 higher. Demand was moderate to good especially for heavier weight cattle. Steer and heifer calves traded $6.00 to $9.00 lower. Feeder cattle supply over 600 pounds was 64%. The CME Feeder Cattle Index for Oct. 4: down $0.09, $175.58.
LEAN HOGS:
Tuesday was an absolute bust for the lean hog market from a technical sense, but Wednesday did some heavy lifting and helped prop the market back up. December lean hogs closed $2.07 higher at $76.50, February lean hogs closed $1.60 higher at $78.87 and April lean hogs closed $1.22 higher at $84.52. Wednesday's market had little to no technical pressure and ample support fundamentally. It was impressive to see the cash market trade as strongly as it did given that Tuesday's market saw a hefty $10.17 jump in prices and on 20,744 head trade, but obviously packers needed the hogs as they bought 18,469 head more in Wednesday's market and were even willing to pay more money for them. The volatile nature of the pork cutout value is tied directly right now to the swings in belly prices. Bellies up Monday, pork cutout value up Monday too. Bellies down Tuesday, pork cutout values down Tuesday too. And again, in Wednesday's market, bellies up on Wednesday, pork cutout values up too. Heading into Thursday's market pork producers are hopeful that the market receives another favorable export report. Pork cutouts totaled 282.02 loads with 241.43 loads of pork cuts and 40.59 loads of trim. Pork cutout values: up $1.00, $99.29. Wednesday's slaughter is estimated at 487,000 head, 3,000 head more than a week ago and 7,000 head more than a year ago. The CME Lean Hog Index for Oct. 3: down $0.89, $93.44.
THURSDAY'S CASH HOG CALL: Lower. Given that packers have been aggressively buying over the last two trading days, it's unlikely that they pay much attention to the market come Thursday as they've likely fulfilled their needs for the week.
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