GENERAL COMMENTS:
Livestock markets remained extremely weak Friday as cattle traders looked for the faint hope of good news in Friday's cattle on feed report. Good news did not come; cattle on feed and cattle placements were above year ago levels and pre-report estimates. This is likely to add to market concerns early next week. Triple-digit losses were seen Friday in live cattle, feeder cattle and lean hog futures. Cattle on feed Oct. 1 increased 1% from year-ago levels. This is the second highest October on-feed inventory level since the series began in 1996.
Cattle placements increased 6% above year-ago levels, leading to the largest placement number since November 2021. Triple-digit losses consumed the feeder cattle and lean hog complex, although nearby live cattle contracts stabilized in late-day trade. Hog prices closed lower on the Daily Direct Afternoon hog report, down $3.59 with a weighted average of $69.57 on 4,094 hogs. December corn closed down 9 1/2 at $4.955 and December soybean meal closed up $0.90 at $423.9. The Dow Jones Industrial Average is down 286.89 at 33,127.28.
From Friday to Friday, livestock futures scored the following changes: October live cattle off $0.85; December live cattle off $2.13; October feeder cattle off $8.05; November feeder cattle off $9.35; December lean hogs off $15.93; December lean hogs off $3.50; December pork cutout off $16.55; and December pork cutout off $2.80.
LIVE CATTLE:
Live cattle futures spent much of the day mixed in an unsettled and limited trading pattern. Late-day pressure developed in all contract months with 2024 contract months carrying most of the market pressure at the end of the week. Continued pressure in feeder cattle futures and weakness in grain markets led to the lack of confidence Friday afternoon. Traders were also anticipating the Cattle on Feed Report released following the closing bell. Report numbers posted a 1% increase in cattle on feed numbers, 6% increase in placements and 11% decrease in marketed cattle.
The combined news of this report is going to give traders a lot to chew on over the weekend and likely to enter the market Monday in a less-than positive tone. When it comes to cattle prices and the futures market, the biggest question is just how much of these increases have been factored into the market over the last few days. Overreacting to reports is not uncommon and will add to the uncertainty when cattle markets open Monday morning.
Cash cattle markets appear to be essentially done for the week with most of the trade developing Thursday afternoon. Trade in the North was marked at mostly $294 per cwt, $2 per cwt higher than the previous week. Southern trade developed at $184 to $185 per cwt. This is a $1 to $2 per cwt gain over last week's average.
Given the bearishness of futures trade and the bearish tone of the Cattle on Feed Report, it is likely that packers will take their chances waiting until next week to fill needed orders.
October live cattle closed $0.13 lower at $184.275, December live cattle closed $0.68 lower at $184.625 and February live cattle closed $1.23 lower at $187.725. Friday's slaughter is estimated at 118,000 head, 6,000 head more than a week ago and 5,000 head less than a year ago. Cattle slaughter for the week is estimated at 620,000 head, 9,000 more than a week ago, and 12,000 less than a year ago.
Boxed beef prices closed higher: choice up $1.26 ($305.38) and select up $1.22 ($278.7) with a movement of 139.95 loads (82.84 loads of choice, 23.53 loads of select, 9.88 loads of trim and 23.70 loads of ground beef).
MONDAY'S CATTLE CALL: Steady. Activity Monday in cash cattle markets is expected to remain extremely sluggish with packers and feeders assessing needs and distributing showlists. The early-week futures' volatility will likely lead to both sides sitting on their hands early in the week.
FEEDER CATTLE:
Feeder cattle futures posted sharp triple-digit losses Friday. The combined market weakness seen through the end of the week led to what was expected to be a bearish Cattle on Feed Report. Once released, the report was even more negative than expected with cattle placements the driving factor of the market concerns.
Cattle placed in feedyards during the month of September were 6% higher than year ago levels. Combined with the strong placement levels seen last month, the concern that the overall number of placements in the system will erode at the expected tight supplies which have helped to support current price levels. Monthly cattle placements are at the highest level since November 2021.
Cattle on feed numbers increased 1%, coming in well over market estimates, currently at the second highest on feed number in the October report since 1996 when the report series started. These price swings moved feeder cattle futures to 4-month lows, with concern that additional pressure may develop early next week. October feeders closed $1.75 lower at $241.825, November feeders closed $2.28 lower at $242.225 and January feeders closed $2.33 lower at $243.05. The CME Feeder Cattle Index for Oct. 18: down $0.84, $243.99.
LEAN HOGS:
Despite the ability to stay objective to wide market swings earlier in the week, lean hog futures posted active triple-digit losses Friday as the bearish shifts in cattle futures and grain trade quickly drew traders to join the "band wagon" at the end of the week. Any hope of finding support at current price levels and rebounding off contract lows was quickly lost as spot month contracts fell over $7 per cwt during the month of October.
December lean hogs closed $2 lower at $66, February lean hogs closed $1.90 lower at $70.425 and April lean hogs closed $2.05 lower at $76.90. Friday's hog slaughter is estimated at 479,000 head, 1,000 head less than a week ago and even with a year ago. Pork cutouts totaled 263.42 loads with 213.59 loads of pork cuts and 49.83 loads of trim. Pork cutout values are up $0.84 at $87.97. The CME Lean Hog Index for Oct. 18: down $0.25, $80.45.
MONDAY'S HOG CALL: Steady to $1 Lower. Late-week pressure in the hog complex is likely to erode the potential for initial early week support.
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