GENERAL COMMENTS:
Despite the attempt to hold prices to a generally neutral position through the first half of the trading day Wednesday, aggressive and sharp losses flooded into all cattle contracts. Live cattle and feeder cattle futures posted losses of $5 per cwt or greater in nearby contract months, causing concern that additional weakness may continue to develop through the rest of the week.
Hog futures were lightly traded but closed mostly lower as traders paid most attention to the carnage developing in the cattle complex. Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.49 with a weighted average of $54.32 on 9,715 hogs. March corn closed down 6 1/4 at $4.843 and January soybean meal closed down $9.30 at $408.5. The Dow Jones Industrial Average is down 70.13 at 36,054.43.
LIVE CATTLE:
Live cattle futures took a sharp market tumble in the last two hours of trade Wednesday as February futures closed $5.42 cents lower as any sense of market support seems to be vanishing through the week. Despite the ability to push prices higher on Tuesday, the overall lack of follow-through support in nearby and deferred contracts was evident as lightly traded late day markets quickly fell over $3 per cwt below midday price ranges. This recent market shift is technically significant because it has now moved nearby contracts to or below contract lows, causing a whole new level of technical weakness across the complex. With little support expected in the next couple of days, the hope is that markets will remain lightly traded, which could create a sense of market stability for now.
Cash cattle trade started to become more evident through the day Wednesday. Trade is seen at the same price levels where scattered light trade developed Tuesday with Southern trade at $171 per cwt. Northern trade is reported at $271 per cwt dressed basis. Prices are currently $3 per cwt lower than last week in the South and $4 per cwt lower than the weighted average in the North. Limited support activity may be seen through the rest of the week.
December live cattle closed $5.05 lower at $163.45, February live cattle closed $5.43 lower at $163.55 and April live cattle closed $4.83 lower at $166.675.
Wednesday's slaughter is estimated at 125,000 head, steady with a week ago and 3,000 head less than a year ago. Boxed beef prices closed mixed: choice down $3.19 ($290.56) and select up $0.77 ($259.9) with a movement of 235.06 loads (130.48 loads of choice, 40.04 loads of select, 45.86 loads of trim and 18.68 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady with midweek trade. The lower moving cash markets over the last two days is expected to set the tone for any additional cattle that may need to be traded yet this week.
FEEDER CATTLE:
Sharp losses developed across all feeder cattle futures with traders quickly backing away from Tuesday gains. The underlying weakness in the complex not only focuses on the technical weakness, but continued pressure in cash markets continues to erode overall support across the entire complex. With prices now at or below contract lows in several contracts, some traders are preparing for the potential of even more market pressure to develop in the near future.
January feeders closed $4.55 lower at $210.15, March feeders closed $5.73 lower at $211.75 and April feeders closed $5.73 lower at $215.65. The CME Feeder Cattle Index for Dec. 4: up $0.45, $224.23.
LEAN HOGS:
Lean hog futures were extremely quiet through the end of the trading session Wednesday. Firm gains developed in December contracts, but volume and open interest remains very light, and this has very little direction in the overall market tone. The rest of the complex closed steady to 20 cents lower with traders comfortable remaining on the sidelines as they watched the freefall of the cattle market during the last couple hours of trade.
December lean hogs closed $0.73 higher at $67.55, February lean hogs closed $0.05 lower at $69.3 and April lean hogs closed $0.15 lower at $75.95. Wednesday's hog slaughter is estimated at 487,000 head, 3,000 head more than a week ago and 1,000 head less than a year ago. Pork Cutouts totaled 353.40 loads with 305.67 loads of pork cuts and 47.73 loads of trim. Pork cutout values are down $1.47 at $83.2. The CME Lean Hog Index for Dec. 4: down $0.24, $69.60.
THURSDAY'S HOG CALL: Steady to $1 lower. The inability to push cash hogs higher early in the week and softness in futures trade could limit stability in cash bids early Thursday.
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