GENERAL COMMENTS:
The livestock complex is trading mixed into Thursday's noon hour as cattle have found support, but the lean hog market continues to struggle. A few bids are currently being offered in the North at $184 to $185, but at this point no new cash cattle trade has developed. December corn is down 5 cents per bushel and December soybean meal is up $6.10. The Dow Jones Industrial Average is down 105.77 points.
LIVE CATTLE:
The live cattle complex is continuing to thrive through Thursday's trade as the market is not only trading higher, but the spot December contract is also trading confidently above its 40-day moving average. Wednesday's stronger close seemed to re-spark traders' enthusiasm and -- with feedlots mostly holding out for better cash prices -- a bullish tone is again surfacing in the live cattle/cash cattle markets. October live cattle are up $0.70 at $185.20, December live cattle are up $0.72 at $187.70 and February live cattle are up $0.67 at $191.92. A couple bids are currently being offered in the North at $184 to $185, but thus far feedlots are slow to accept as they wait for potentially even stronger bids. Asking prices in the South remain firm at $183 but are still not fully established in the North. A light movement of trade developed on Wednesday afternoon in the South where most deals were marked at $183, which is $1.00 higher than last week's weighted average. More trade will likely develop throughout the day but at this point feedlots are holding a firm stance on wanting better prices.
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 are mixed: choice up $0.55 ($300.83) and select down $0.52 ($274.78) with a movement of 110 loads (69.39 loads of choice, 12.91 loads of select, 16.92 loads of trim and 10.78 loads of ground beef).
FEEDER CATTLE:
The feeder cattle complex is elated to see live cattle futures trading higher and continues to push its contracts higher as technical support is finally available to its market. October feeders are up $1.52 at $251.65, November feeders are up $1.45 at $253.45 and January feeders are up $1.75 at $255.07. It's significant to see the spot November contract trading above its 100-day moving average as that's been a threshold traders have struggled with as of late. But with the added support of stronger tones in the live cattle/cash cattle market and seeing corn prices weaker this morning -- feeders are charging into Thursday's noon hour.
LEAN HOGS:
The lean hog complex is again trading lower as traders are needing more fundamental support in the immediate market to justify trading the contracts higher. December lean hogs are down $0.40 at $69.57, February lean hogs are down $0.25 at $74.42 and April lean hogs are down $0.02 at $80.97. At this point, the spot December contract is trading lower but it isn't pressuring current support levels, and with Thursday's WASDE report increasing 2023 pork production, traders may be able to respect the support plane recently established.
The projected CME Lean Hog Index for 10/11/2023 is up $0.02 at $82.42, and the actual index for 10/10/2023 is up $0.14 at $82.40. Hog prices are lower on the Daily Direct Morning Hog Report, down $0.85 with a weighted average price of $73.46, ranging from $68.00 to $76.00 on 3,697 head and a five-day rolling average of $74.22. Pork cutouts total 135.44 loads with 122.08 loads of pork cuts and 13.36 loads of trim. Pork cutout values: up $1.20, $93.59.
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.
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