Wednesday Closing Livestock Market Update - Traders Carefully Picked Which Markets to Support

GENERAL COMMENTS

The livestock complex closed in a mixed manner as both the live cattle and lean hog contracts saw some interest ahead of Wednesday's end, but with the corn market posting a mild rally, the feeder cattle complex closed lower. Hog prices closed $2.56 higher on the Daily Direct Afternoon Hog Report, pushing the weighted average to $84.68 on 26,794 head. March corn is up 4 cents per bushel and January soybean meal is up $10.40. The Dow Jones Industrial Average is up 1.58 points.

LIVE CATTLE:

The live cattle complex closed in a mixed manner as the nearby contracts struggled to attract trader interest, but the deferred contracts closed mildly higher. However, potentially stealing the show in Wednesday's live cattle market is the fact that boxed beef price closed as aggressively as they did. Until we can see more consistent behavior from beef prices, I think it's too early to say an official bottom has been found, but I'll be excited when the bottom is found so that trades can begin to optimistically approach the market again. December live cattle closed $0.37 higher at $151.92, February live cattle closed $0.07 lower at $153.55 and April live cattle closed steady at $157.62. The cash cattle market saw a little bit of trade develop at $247, which is $2.00 lower than last weeks weighted average and the South traded a handful (more like half a handful) of cattle at $153, which is also $2.00 lower than last week's weighted average. Given that so few traded in both regions, Thursday's market could still pull off trading cattle steady with last week's trend if feedlots work together and aren't afraid to let the clock pressure packers. 

Wednesday's slaughter is estimated at 127,000 head, 1,000 head less than a week ago and 7,000 head more than a year ago.

Boxed beef prices closed higher: choice up $6.31 ($248.96) and select up $0.63 ($219.77) with a movement of 174 loads (106.21 loads of choice, 23.50 loads of select, 21.44 loads of trim and 22.71 loads of ground beef). The choice/select spread sits at $29.19.

THURSDAY'S CATTLE CALL: Steady. Packers may be pulling up the reins on production, but front-end supplies are thin and packer's don't have a plethora of cattle committed.

FEEDER CATTLE:

With the corn complex closing $0.02 to $0.04 higher and cash cattle testing the week's market out at lower prices, the feeder cattle complex closed lower. January feeders closed $0.90 lower at $180.90, March feeders closed $0.90 lower at $183.25 and April feeders closed $0.72 lower at $186.60. Yes, the live cattle complex closed mixed, which some hoped would have pulled the feeder market higher, but with the negative morale looming over the market, a higher close didn't even seem like an option for the market.

At Ozarks Regional Stockyards in West Plains, Missouri, compared to last week, steer calves traded steady to $4.00 lower, while heifer calves traded steady. Yearling steers traded full steady but there weren't enough yearling heifers to establish a market trend. Feeder cattle supply over 600 pounds was 38%. The CME Feeder Cattle Index for Dec. 6: up $0.49, $179.02.

LEAN HOGS:

The lean hog complex continues to surprise me as, with the day's pork cutout value closing $5.37 lower, the futures market rallied on through closing. It was helpful that the cash sector was able to move nearly 27,000 head at $2.56 higher than Tuesday's price. But still, he unnerving print that pork cutouts closed $5.37 lower -- mainly pushed by the $20.09 drop in bellies and the $10.26 drop in picnics -- isn't a little pill to swallow. Heading into Thursday's market, the complex could be pressured if exports are lofty and as cash interest will likely be less. December lean hogs closed $0.10 higher at $82.37, February lean hogs closed $0.27 lower at $86.65 and April lean hogs closed $0.02 higher at $92.82.

Pork cutouts totaled 335.82 loads with 300.51 loads of pork cuts and 35.31 loads of trim. Pork cutout values: down $5.37, $84.45. Wednesday's slaughter is estimated at 492,000 head, 2,000 head less than a week ago and 15,000 head more than a year ago. The CME Lean Hog Index for Dec. 5: up $0.15, $82.94.

THURSDAY'S HOG CALL: Lower. Given that packers were so aggressive in Wednesday's market, it's likely that they've procured most of their needs at this point.