Monday Closing Livestock Market Update - Boxed Beef Prices and Pork Cutout Values Both Close Higher

GENERAL COMMENTS:

The livestock complex faired better throughout Monday's market than expected given that today was the first trading day that traders had to react to the war outbreak in Israel. Yes, all the contracts closed modestly lower, but some strong fundamental wins were scored throughout the day with pork cutout values closing higher along with higher boxed beef prices. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.89 with a weighted average price of $74.81 on 5,042 head. December corn is down 3 3/4 cents per bushel and December soybean meal is up $2.50. The Dow Jones Industrial Average is up 197.07 points.

LIVE CATTLE:

The live cattle contracts may have not been able to close higher thanks to traders' uncertainty amid domestic political pressures, an uneasy economy and the onset of war in Israel – but seeing boxed beef prices close higher does come as positive news. Most of the contracts closed more than $1.00 lower, and the spot December contract again closed below its 40-day moving average. It's likely that traders will remain cautious throughout the week as external stressors are heavily weighing on the market, but some strong fundamental powers could be coming to fruit – such as better boxed beef demand. October live cattle closed $0.70 lower at $182.37, December live cattle closed $1.32 lower at $185.35 and February live cattle closed $1.15 lower at $189.62. Monday's slaughter is estimated at 125,000 head – steady with a week ago and 1,000 head less than a year ago.

Last week, Northern dressed cattle traded for mostly $288 to $291 which is $2.00 lower to $1.00 higher than the previous week's weighted average. Southern live cattle traded for $182, which is $1.00 lower than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 94,461 head. Of that, 80% (75,497 head) were committed to the nearby delivery while the remaining 20% (18,964 head) were committed to the deferred delivery.

Boxed beef prices closed higher: choice up $1.41 ($303.42) and select up $1.72 ($277.50) with a movement of 75 loads (40.07 loads of choice, 21.89 loads of select, zero loads of trim and 13.32 loads of ground beef).

TUESDAY'S CATTLE CALL: Steady. It's tough saying what this week's cash cattle market will amount to knowing that packers got 94,000 head bought in last week's market, but also knowing that boxed beef prices are starting to improve which should improve packer's margin and potentially lead to faster chain speeds.

FEEDER CATTLE:

The feeder cattle complex couldn't do much of anything through Monday's market as traders were leery of the marketplace amid outside pressures and as the market is continuing to dance hesitantly along the 100-day moving average in the spot November contract. October feeders closed $1.47 lower at $246.90, November feeders closed $1.22 lower at $249.65 and January feeders closed $1.92 lower at $251.85. The feeder cattle complex needs to see excellent fundamental support if it's going to break back above the 100-day moving average which will either come from sharply higher sales in the countryside or better support from the live cattle/cash cattle market. At Joplin Regional Stockyards in Carthage, Missouri compared to last week feeder steers sold $7.00 lower to $2.00 higher. Feeder heifers traded $6.00 lower to $3.00 higher. The sale report did note that unweaned unvaccinated bulls coming to market are seeing substantial discounts compared to weaned and vaccinated steers. Feeder cattle supply over 600 pounds was 37%. The CME feeder cattle index 10/6/2023: down $0.68, $249.73.

LEAN HOGS:

Even though the lean hog complex closed lower, the market was able to see fairly strong fundamental support through Monday's end which could help the market come Tuesday. Pork cutout values were able to push a modest $1.84 gain through the day's end with the belly rallying $13.39, the loin jumping $2.88 and the rib gaining $2.17. It was also surprising to see cash prices close higher given that it's Monday and that very rarely do packers support the cash market this early in the week. Nevertheless, if Thursday's WASDE report can share anything positive whatsoever, the lean hog market may be able to continue with its upward trek that it started last week. October lean hogs closed $0.35 lower at $81.97, December lean hogs closed $1.10 lower at $72.47 and February lean hogs closed $0.90 lower at $76.67. Pork cutouts total 234.06 loads with 203.98 loads of pork cuts and 30.08 loads of trim. Pork cutout values: up $1.84, $95.06. Monday's slaughter is estimated at 486,000 head – steady with a week ago and 1,000 head more than a year ago. The CME lean hog index 10/5/2023: down $0.67, $83.03.

TUESDAY'S HOG CALL: Steady to somewhat higher. Given that pork cutout values are higher and that packers felt the need to support Monday's cash market, that's a strong chance that they are active again in Tuesday's market as they may be short supply.