GENERAL COMMENTS:
The markets are trading mixed into Wednesday's afternoon as traders are trying to determine whether the reduction in beef exports for 2022 offsets the added strength in cash prices and stronger production speeds -- all points that were highlighted in Wednesday morning's WASDE report. Meanwhile, the feeder cattle complex is trading higher upon the corn market's lower turn and lean hog are trending mixed. December corn is down 1/2 cent per bushel and December soybean meal is down $1.10. The Dow Jones Industrial Average is down 315.51 points.
LIVE CATTLE:
The live cattle complex has again pulled another trick out of its hat, as the market gapped lower at the day's start, showing that there's some fear about whether or not Monday's and Tuesday's advancement were sound moves. Much of the market's midmorning anxiety was tied to what would or wouldn't be found in Wednesday's WASDE report, but, largely, the market stumbled across no surprising news. Yes, exports were lower for 2022 as Asia markets aren't expected to buy as aggressively through the remainder of the year, but that was the only negative point in the report. December live cattle are down $0.90 at $152.15, February live cattle are down $0.45 at $154.32 and April live cattle are down $0.40 at $157.85. The cash cattle market has yet to see any cattle trade, and it's not looking like Wednesday's market will see much action and that this week's business will again be postponed until Thursday. Asking prices in the South are noted at $152 and Northern asking prices are at $245.
Wednesday's WASDE report favors the cattle and beef markets in a mostly supportive fashion. Beef production for 2022 was raised by 211 million pounds as aggressive throughput on fed cattle, combined with heavier carcass weights, contributes more beef to the market. For 2023, beef production was decreased by 90 million pounds as the market expects few cows to be slaughtered and tighter fed cattle supplies. Quarterly steer prices for 2022's fourth quarter jumped by $4.00 from last month to average $152.00. For 2023, first-quarter steer prices are anticipated to average $153 (up $2.00 from last month) while second quarter prices in 2023 are anticipated to average $154 (up $2.00 from last month as well). Beef imports for 2022 fell by 13 million pounds, but exports also fell by 29 million pounds as the Asia markets aren't expected to buy as aggressively through the end of the year. Beef imports for 2023 remained steady at 3,350 million pounds, and exports held steady at 3,070 million pounds.
Boxed beef prices are lower: choice down $0.12 ($264.82) and select down $0.05 ($236.00) with a movement of 95 loads (62.73 loads of choice, 11.51 loads of select, 13.85 loads of trim and 6.79 loads of ground beef).
FEEDER CATTLE:
With the corn contracts trending $0.04 lower into Wednesday's afternoon and cash cattle expected to trade higher again this week, the feeder cattle contracts are trading higher into Wednesday's afternoon. The market has been able to maintain trading just above its 40-day moving average in the spot January contract, and so long as nothing hasty develops in the grain sector, the market will likely be able to keep this momentum through closing. January feeders are up $0.45 at $180.35, March feeders are up $0.27 at $182.42 and April feeders are up $0.32 at $185.60.
LEAN HOGS:
The lean hog complex is again seeing some push back in its spot December contract while the rest of the nearby contracts trade modestly higher. December lean hogs are down $0.27 at $85.30, February lean hogs are up $0.52 at $89.05 and April lean hogs are up $0.47 at $94.67. With pork cutout values closing lower Tuesday afternoon, the market hopes to see better support in Wednesday's afternoon market as it could incentivize packers to buy more hogs in the cash market.
Wednesday's WASDE report shared mostly supportive news for both the pork and hog markets. Pork production for 2022 was decreased by 27 million pounds as recent production speeds have waned. Quarterly hog prices for the fourth quarter of 2022 gained $1.00 from last month to average $64.00. Hog prices in the first quarter of 2023 are expected to average $63.00, and prices in the second quarter of 2023 are expected to average $71.00, both steady with last month's report. Pork imports for 2022 fell by 53 million pounds, exports grew by 20 million pounds. For 2023, pork imports fell by 95 million pounds, but exports remained steady.
The projected lean hog index for Nov. 8 is down $0.82 at $89.46 and the actual index for Nov. 7 is down $0.60 at $90.28. Hog prices are higher on the Daily Direct Morning Hog Report, up $1.64 with a weighted average of $87.75, ranging from $78.00 to $92.00 on 7,044 head and a five-day rolling average of $85.79. Pork cutouts total 181.81 loads with 167.03 loads of pork cuts and 14.78 loads of trim. Pork cutout values: up $1.82, $96.96.
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