GENERAL COMMENTS:
It was a strong technical day for the livestock contracts as all three markets closed higher. It will be especially interesting, however, to see how traders view the Quarterly Hogs and Pigs Report Friday morning as the report shared mixed messages. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.86 with a weighted average price of $74.76 on 2,955 head. December corn is up 5 1/4 cents per bushel and December soybean meal is up $2.40. The Dow Jones Industrial Average is up 91.05 points.
LIVE CATTLE:
Even though a government shutdown looms overhead of the cattle complex, traders elected to advance the live cattle contracts through Thursday's end as they seemed to value the market's strong fundamental position more so than they had earlier in the week. October live cattle closed $1.60 higher at $186.50, December live cattle closed $2.25 higher at $190.42 and February live cattle closed $2.22 higher at $194.62. Packers didn't give the cash cattle market much interest through Thursday's trade as a few bids were offered in Nebraska, but feedlots elected to let them sit on the table unless packers were going to up the ante. Thus far this week Southern live cattle have traded for $183 which is steady with last week's weighted average, and Northern dressed cattle have traded for mostly $290 to $292 which is $1.00 to $2.00 lower than last week's weighted average. Asking prices for cattle left on showlists remain at $183 plus in the South and $292 plus in the North. More trade will likely develop ahead of the week's end, but it could just be clean up in its nature. Thursday's slaughter is estimated at 124,000 head -- steady with last week but 3,000 head less than a year ago.
Beef net sales of 17,700 mt for 2023 were up 29% from the previous week and 42% from the prior 4-week average. The three primary buyers were Japan (3,900 mt), South Korea (3,500 mt) and China (3,200 mt).
Thursday's actual slaughter data shared that for the week ending 9/16/2023 steers averaged 919 pounds, which is two pounds heavier than a week ago and one pound more than a year ago. During the same week, heifers averaged 821 pounds which is four pounds lighter than a week ago and 11 pounds lighter than a year ago.
Boxed beef prices closed mixed: choice up $0.56 ($301.51) and select down $1.07 ($277.44) with a movement of 149 loads (77.48 loads of choice, 51.02 loads of select, 4.04 loads of trim and 16.15 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady. Given that packers were able to buy a sizeable volume of cattle last week likely means that they'll only pay modest interest to the market this week and try to keep prices no better than steady.
FEEDER CATTLE:
The feeder cattle complex kept with its rallying nature well through Thursday's end as the market saw consistent $2.00 gains across its contracts. Demand continues to remain strong in the countryside although many sales are noting that farmers are still out in the field and that interest should improve once they're done harvesting. October feeders closed $2.47 higher at $254.72, November feeders closed $2.87 higher at $257.67 and January feeders closed $2.65 higher at $260.05. At Winter Livestock Auction in Pratt, Kansas compared to last week and at their midsession point, feeder steers weighing 850 to 950 pounds were selling steady to $3.00 lower, but steers weighing 700 to 850 pounds were selling $1.00 to $4.00 higher. There weren't enough heifers at the sale to generate and accurate market trend, although lower tones were noted. Feeder cattle supply over 600 pounds was 95%. The CME feeder cattle index 9/27/2023: down $1.07, $252.20.
LEAN HOGS:
The lean hog complex also kept with its rallying stride through Thursday's end, but it will be interesting to see what traders do with the market Friday morning. This afternoon's Quarterly Hogs and Pigs report was a mixed bag as revisions were made to the previous report, and although the September/November farrowings were marked 5% lower, there appears to be no shortage of supply moving forward. The other thing that didn't sit well with me about the report was that I expected a bigger reduction in the number of sows kept back for breeding -- one would have thought that with the financial hardship in producers endured late 2022/into 2023 and in preparation for Prop12 that more sows would have been culled? But regardless, the contracts closed higher despite both cash prices and pork cutout values ending the day lower. October lean hogs closed $1.82 higher at $83.95, December lean hogs closed $2.75 higher at $75.52 and February lean hogs closed $2.32 higher at $78.60. Pork cutouts totaled 313.33 loads with 278.11 loads of pork cuts and 35.22 loads of trim. Pork cutout values: down $0.84, $96.92. Thursday's slaughter is estimated at 481,000 head - 3,000 head less than a week ago and 5,000 head more than a year ago. The CME lean hog index 9/26/2023: down $0.17, $86.14.
Pork net sales of 27,400 mt for 2023 were down 9% from the previous week and 6% from the prior 4-week average. The three primary buyers were Mexico (11,600 mt), Japan (4,500 mt) and South Korea (3,900 mt).
FRIDAY'S HOG CALL: Lower. At this point, packers have made it clear that they've secured their needs for the week and won't likely buy many more hogs in this week's cash market.
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