GENERAL COMMENTS:
Strong, triple-digit losses swept through live cattle and feeder cattle trade Thursday as all contracts quickly pulled back from the past two days of higher moving markets. Both markets remain firmly rooted above lows set early in the week, but the lack of support on the last day of November is creating additional concerns that prices could remain stuck in the current but weak price pattern for the foreseeable future.
Light buying developed in lean hog futures with all but spot December contracts moving higher. This could help to spark follow through end of the week gains Friday morning.
Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.54 with a weighted average of $58.6 on 2,551 hogs. March corn closed up 7 at $4.828 and January soybean meal closed down $3.00 at $424. The Dow Jones Industrial Average is up 520.47 at 35,950.89.
LIVE CATTLE:
Triple-digit losses swept through live cattle futures Thursday as traders continue to back away from gains seen the last two trading sessions. All nearby contracts fell $1 per cwt as selling pressure eased slightly at the end of the session.
A portion of the market pullback is expected based on end-of-the-month position squaring of fund traders who are adjusting holdings before moving into the month of December. There remains uncertainty surrounding the direction of cash values through the end of the year and how significant if any end of year beef price support will develop over the coming weeks.
Cash cattle trade continues to develop in most areas with additional trade in the North seen at $275 dressed and $175 per cwt live. This is generally $4 per cwt lower on a dressed basis than last week's weighted average. Southern trade is seen at $174 per cwt, falling $1 per cwt below early week trade, but $3 per cwt below last week's average. The lack of cash market support despite earlier gains in futures trade during the week is disappointing as packers continue to focus on the ability to work prices lower surrounding the fear that potential further losses could develop in early December.
December live cattle closed $1.03 lower at $170.875, February live cattle closed $1.65 lower at $171.825 and April live cattle closed $1.50 lower at $174.425.
Thursday's slaughter is estimated at 121,000 head, 6,000 head less than a week ago and 7,000 head less than a year ago.
Boxed beef prices closed higher: choice up $1.99 ($299.02) and select up $0.66 ($264.75) with a movement of 181.31 loads (115.24 loads of choice, 33.21 loads of select, 15.10 loads of trim and 17.76 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady with Thursday trade. The weaker tone of cash market prices is expected to continue, although prices are expected to have been set with only some clean-up activity expected Friday.
FEEDER CATTLE:
Weakness in feeder cattle futures led the market lower once again with spot January futures leading the market lower, falling $2.25 per cwt. The strong gains seen over the past two trading sessions left markets unsupported on the last trading day of November. End-of-the-month position adjustments are seen with trades taking advantage of the recent price swings in the complex.
Overall, the feeder cattle complex still remains extremely under pressure falling nearly $30 per cwt through the month of November and tumbling over $50 per cwt in the last three months. Although prices have pulled above early week lows, the concern that support levels may once again be tested in early December has many traders extremely cautious.
January feeders closed $2.25 lower at $219.95, March feeders closed $1.70 lower at $222.575 and April feeders closed $1.65 lower at $226.675. The CME Feeder Cattle Index for Nov. 28: up $2.52, $224.77.
LEAN HOGS:
Lean hog futures found late-month support in all but soon to expire December contracts. February futures led the complex higher, gaining $1.37 per cwt with increased focus on building increased market stability into the complex as well as additional support from news that Mexico is halting pork exports from Brazil. Even though overall exports slipped from the previous week in the morning report, the expectations that Mexico will turn to the U.S. for additional pork needs is helping to solidify some buyer support among nearby contract months.
December lean hogs closed $0.20 lower at $68.775, February lean hogs closed $1.38 higher at $71.475 and April lean hogs closed $0.88 higher at $77.35. Thursday's hog slaughter is estimated at 486,000 head, 36,000 head more than a week ago and 4,000 head less than a year ago. Pork Cutouts totaled 321.00 loads with 285.22 loads of pork cuts and 35.78 loads of trim. Pork cutout values are down $0.14 at $83.83. The CME Lean Hog Index for Nov. 28: down $0.13, $71.53.
FRIDAY'S HOG CALL: Steady to $1 lower. Limited support in cash and pork values at the end of the week is expected to keep end of the week cash hog prices soft early Friday morning.
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