GENERAL COMMENTS:
It's so refreshing to see the revitalized nature of the cattle complex as both the live cattle and feeder cattle markets not only closed higher but closed above significant technical averages. The market's ability to close higher was largely solidified by today's stronger trade in the cash cattle market. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.69 with a weighted average price of $73.61 on 5,057 head. December corn is up 8 cents per bushel and December soybean meal is up $15.80. The Dow Jones Industrial Average is down 156.03 points.
LIVE CATTLE:
The live cattle market may have just closed modestly higher, but the turn of events in the market reignited cattlemen's hope that the rallying nature of the market hasn't been completely lost to external fears. Traders were supportive of the live cattle complex all throughout the day but what really solidified the market's ability to close higher was the positive trade in the cash cattle market. A light round of trade was reported in the North shortly after the noon hour at $292 which is $3.00 higher than last week's weighted average. Live cattle in the North sold for $185 which is also $3.00 higher than last week's weighted average. Southern live deals continued to trick in at $183 to $184 which is steady to $1.00 higher than Wednesday's business, but $1.00 to $2.00 higher than last week's weighted average. Packers elected to get more aggressive in the cash market as boxed beef demand is expected to grow stronger. Some more trade could develop ahead of the week's end, but prices are likely set for the week. Asking prices for cattle left to sell on showlists are at $184 in the South and $293 plus in the North. Thursday's slaughter is estimated at 120,000 head -- 4,000 head less than a week ago and 7,000 head less than a year ago.
Thursday's WASDE report isn't as supportive as cattle producers would have hoped. Beef production for 2023 was raised by 35 million pounds thanks to higher cow and bull slaughter in the second half of the year, which more than offset the weaker fed-cattle slaughter. But USDA did state, "The increase in total slaughter is partially offset by lower dressed weights." I question that statement because last week's most recent slaughter data shows carcass weights are the second highest, they've been in history -- only behind 2022 by a pound or two. Regarding quarterly price projections, prices were slightly decreased from a month ago due to recent price trends. The third quarter of 2023 is now expected to average $184.27, which is $0.27 higher than last month, but the fourth quarter of 2023 is now expected to average $185.00 which is $5.00 less than a month ago. For 2024, the first quarter is now expected to average $187, which is $1.00 less than last month, and the second quarter of 2024 is now expected to average $185, which is $1.00 lower than last month's projection. Imports for 2023 were increased by 70 million pounds, and 2023 beef exports were decreased by 20 million pounds.
Boxed beef prices closed mixed: choice up $0.91 ($301.19) and select down $0.28 ($275.02) with a movement of 166 loads (108.65 loads of choice, 22.66 loads of select, 17.47 loads of trim and 16.72 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady. Given that there's been a sizeable trade now in both regions, prices are likely set for the week.
FEEDER CATTLE:
The feeder cattle complex took one look at the momentum that was brewing in the live cattle/cash cattle market, set its eyes on higher prices, and rallied through the day's end even with nearby corn prices closing $0.07 to $0.08 higher. October feeders closed $1.85 higher at $252.02, November feeders closed $1.57 higher at $253.57 and January feeders closed $1.17 higher at $254.47. The spot November contract again closed above its 100-day moving average which continues to be a positive sign for the market that its rallying nature hasn't been entirely lost and that traders were just being leery amid external pressures. At the Torrington Livestock Auction in Torrington, Wyoming, compared to last week, yearling steers and heifers traded $2.00 to $4.00 lower. Calves traded mostly steady except for long-string reputation steer calves which sold sharply higher. Feeder cattle supply over 600 pounds was 76%. The CME feeder cattle index 10/11/2023: up $0.51, $250.30.
LEAN HOGS:
The lean hog complex was challenged throughout Thursday's market but by the day's end, higher prices largely summarized the market's close. December lean hogs closed $0.12 higher at $70.10, February lean hogs closed $0.35 higher at $75.02, and April lean hogs closed $0.52 higher at $81.52. Both cash prices and pork cutout values closed slightly lower, so today's higher close in the futures complex was solely because of the support of traders who found some confidence in today's WASDE report as production for 2023 was increased. Thursday's slaughter is estimated at 485,000 head -- 4,000 head more than a week ago and 7,000 head less than a year ago. The CME lean hog index 10/10/2023: up $0.14, $82.40.
Thursday's WASDE report shared mixed news for the hog and pork markets. Pork production for 2023 was raised by 130 million pounds as slaughter speeds in the second half have increased and based on the revisions to the first half of the 2023 pig crop. In terms of quarterly price projections, the third quarter of 2023 is expected to average $69.27, which is down $0.27 from last month's projection, and the fourth quarter of 2023 is now expected to average $58.00, which is $1.00 lower than last month's report. For 2024, hog prices in the first quarter are expected to average $59.90, which is $2.30 lower than last month's projection, and second quarter prices for 2024 are expected to average $59.70 which is $0.20 cheaper than last month's projection. Imports for 2023 were raised by 25 million pounds, and 2023 pork exports were decreased by 125 million pounds.
FRIDAY'S HOG CALL: Lower. Packers were aggressive early this week in the cash market and it's likely that they've secured all the supplies they need for the week.
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