GENERAL COMMENTS:
October lean hogs closed at a new one-month high Wednesday, helped by the highest pork cutout values since August 2023. October live cattle started the day lower, but finished slightly higher, waiting for cash trade to develop.
LIVE CATTLE:
October live cattle prices dipped early and then came back to end up $0.15 at $186.27 Wednesday, nudging back higher, close to their highest October prices on record. Except for light trade in Kansas at $187 on Tuesday, cash trade remains quiet and may not develop until Friday.
Overall, consumer demand for beef has been supportive this summer, but there is a chance boxed beef prices have seen their peak. Wednesday afternoon's USDA report showed choice boxed beef prices down 53 cents at $312.68 and selects down $2.70 at $293.96 with 188 total loads. Last week's slower slaughter pace appears to be repeating again this week. USDA estimated Wednesday's slaughter at 122,000, up from 121,000 last week. Technically speaking, October live cattle remain in an uptrend with support at $181.72 and are challenging their highest October prices on record.
THURSDAY'S CATTLE CALL: Steady with uncertainty over this week's cash trade.
FEEDER CATTLE:
August feeder cattle traded lower out of the gate and ended down $1.62 at $257.12 Wednesday but is still within its sideways trading range. A breakout above $264 or below $253 would set a new trend, but until then, prices remain confined by a large symmetrical triangle that goes back to September 2023.
On one hand, the year started with 13.3 million calves in U.S. inventory, the lowest number in decades. Feeder prices achieved record highs in May, but it is difficult to say calf numbers have increased significantly. Pasture conditions have been better in the western Plains this year, but there is not much sign of heifer retention yet.
Noncommercials are net short in feeders, hoping for a sell-off, but the cash side of feeder prices has been holding firm. On Wednesday afternoon, the CME Feeder Index was quoted at $257.74 as of Monday, down $3.63 from a week ago, but slightly above Wednesday's close in the August contract.
LEAN HOGS:
October lean hogs recovered from a quick dip early Wednesday and finished up $0.90 at $78.02, the seventh consecutive higher close and another new one-month high. The sudden bullish reversal since early July is similar to a quick U-turn prices made in May 2023. In both instances, attempts to trade below $70 were quickly rebuffed as being too cheap.
Thanks for hogs' higher prices this month can go to consumers, lifting cutout values to their highest level since August 2023. Wednesday afternoon's report daily pork report showed pork cutouts up $1.26 at $104.76, giving packers good reason to keep buying hogs. Wednesday's gains in hams, bellies, loins and picnics more than offset losses in ribs and butts.
Along with the higher cutouts, USDA's daily direct report showed the price of national negotiated hogs increased to $85.30, while formula prices slipped back to $89.82. On Wednesday afternoon, the CME's Lean Hog Index was projected at $90.77 as of Tuesday, up $1.97 on the week.
So far in 2024, hog slaughter has remained consistent, up 1.1% from a year ago. On Wednesday, USDA estimated hog slaughter at 479,000, the same as a week ago. Technically speaking, October lean hogs are in the process of posting a bullish monthly reversal from a cheap price with help from improved retail demand.
THURSDAY'S HOG CALL: Steady with support from firm cash prices.
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