Thursday Midday Livestock Market Update - Active Losses Develop

GENERAL COMMENTS:

Active losses in lean hog futures have taken center stage once again Thursday morning. After breaking through initial support levels at midweek, nearby contracts have posted sharp losses from $2 to $2.50 per cwt as traders try to uncover renewed support. Cattle trade is much less volatile, but live cattle prices have dipped below early week lows and are also trying to find a sense of technical support before the end of the week. December corn is down 7 cents per bushel and December soybean meal is down $5.20 per ton. The Dow Jones Industrial Average is down 126 points with Nasdaq up 49 points.

LIVE CATTLE:

Live cattle futures have posted moderate to active losses Thursday morning with nearby contracts .85 to .97 per cwt lower in light to moderate trade. The lack of higher cash cattle trade during the week and beef values that have been steady at best are weighing on futures, which had focused on a potential market turnaround over the last week. Given that prices are still in the top 25% of recent trading ranges, technical support levels are going to be less of an issue, with more focus moving on fundamental support for live cattle and beef cattle markets. Cash cattle activity remains at a standstill following light to moderate developing in most areas. Trade this week has been steady with last week's market averages at $124 live and $196 per cwt dressed. It is very likely that additional cattle will be sold before the end of the week, but unless major shifts are seen in either futures trade or Friday's Cattle on Feed report, overall price ranges may be little moved. Asking prices on cattle still on showlists are at $126 and higher live basis and $198 and higher dressed. With cattle still left for sale, feeders seem confident they will get higher prices or they appear willing to hold them into next week. The Special Fed Cattle Exchange Auction held today listed a total of 2,430 head (Texas 1,284 head; Kansas 756 head; Nebraska 138 head; South Dakota 252 head), of which none actually sold. Reserve prices ranged from $121 to $126. Opening prices ranged from $119 to $122, high bids ranged from $121 to $124.25. 

Thursday morning's boxed beef prices are higher in moderate trade, with choice cuts $0.44 higher at $280.47 and selects up $1.01 at $263.81 on a total count of 71 loads. 

Dow Jones estimated Thursday's cattle slaughter at 120,000 -- steady with a week ago and 2,000 more than year ago levels.

FEEDER CATTLE:

Feeder cattle trade continues to hold its own Thursday morning, despite pressure in other livestock markets. Limited gains are seen in spot October contracts, moving prices back above the $156 per cwt price level. Although this level has very little technical market relevance, the ability to break away from the rest of the complex is helping add a sense of stability in feeder cattle that seems to be quickly evaporating in live cattle trade. Deferred futures are showing the most pressure, as continued concerns surrounding production costs and future demand. But given price level and recent market swings, feeder cattle markets may continue to hold within the currently wide trading range. Analyst expectations for Friday's cattle placements are at 101.4% year ago levels with a range of 98.8 to 103.3%. The ability for report totals to remain close to expectations may help to bring more stability to the entire complex. The CME Feeder Index was priced at $154.03 for Oct. 19.

LEAN HOGS:

Lean hog futures have seen aggressive selling Thursday morning. Following the inability to hold initial support levels at $77 per cwt over the past couple of days, significant liquidation started. The lack of China's involvement in pork purchases in the latest export sales report added to the weaker trend, allowing nearby contracts to trade $2 to $2.50 per cwt lower through most of the morning. Next support levels for spot December lean hog futures remain near $72 per cwt, less than $2 per cwt below current price levels. A move below these levels would essentially wipe out the aggressive market shifts seen over the last month, causing traders to once again search for any sign of long-term support. The lower supply data seen in September has little long-term impact if pork demand cannot be maintained. Weekly export sales for pork are listed at 20,900 metric tons (mt). This is viewed as generally bearish for the overall pork industry. Although total sales are not totally out of line with previous weeks, the continued lack of buyer support from China quickly gained traders attention. China weekly purchases were just 200 mt, although 4,100 mt of previously purchased pork was shipped last week. This is once again creating significant concern that overall pork demand may continue to struggle well into 2022. Wholesale pork prices surged higher following an aggressive gain in belly cuts of $47.17 per cwt. Cutouts are up $7.95 at $104.82 Thursday morning on 150.24 loads. Negotiated hog prices are $1.02 lower at $65.19 on 5,325 head on the morning report. Dow Jones estimated Thursday's hog slaughter at 478,000 -- 1,000 more than a week ago and 9,000 less than year-ago levels. The CME Lean Hog Index is listed at $85.89 per cwt for Oct. 20.

Thursday Morning Livestock Market Update - Cattle Market Uncertainty Continues

GENERAL COMMENTS:

Cattle futures closed higher leaving the market maintaining a sideways trading pattern. As long as cash holds steady, futures may remain sideways. Volatility was confined to about $1.00 swing in the market. Traders are trying to weigh the amount of cattle available to the market with the pace of current demand. Packers have been willing to pay steady money for cattle and are finding willing sellers. Boxed beef was mixed Wednesday with choice down $0.85 and select up $1.27. Demand may hold or increase at these prices, leaving beef prices mixed for the time being. Traders are cautious over the upcoming Cattle on Feed report to be released Friday. Weekly export sales will be released Thursday morning and may have an impact on price direction.

Hogs came under substantial pressure as the weakness of cash and cutouts fails to provide much needed support. The chart gaps for December, February and April were closed, but that did not uncover aggressive buying interest. Cash was slightly lower on the National Direct Afternoon report with a loss of $0.04. Cutouts took it on the chin with a decline of $2.40. The recent increase of futures without cash and product support leaves the market vulnerable to further pressure. Weekly export sales need to be good in order to provide some positive fundamental news. Saturday slaughter is projected at 225,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle futures bounced from the lows, leaving live cattle in a sideways trading range.	1)	Live cattle futures are maintaining the gains but are not able to continue to trend higher.
2)	Steady cash trade provides greater optimism that both supply and demand may be balanced with the potential that price may increase.	2)	The Cattle on Feed report could show a significant amount of cattle in feedlots keeping near-term supply heavy.
3)	Now that some contracts closed the lower chart gaps, December and February have charts gaps over $5.00 higher that may be filled.	3)	Underlying fundamentals in the hog market are bearish. Cash and cutouts have not supported the recent rally with further weakness possible.
4)	Weekly export sales are expected to be good with China listed again as a buyer.	4)	The amount of pork expected to be available to the market in the weeks ahead may be difficult to absorb unless both domestic and international demand improves.

Wednesday Closing Livestock Market Update - Cattle Futures Recover

GENERAL COMMENTS:

Active buyer support actively moved into cattle trade during the last half of the day, with increased support seen in nearby and deferred contracts. Although traders remain concerned about short-term inventory levels burdening the cattle market, the focus on lower supplies long term is regaining traders' attention. Hog futures, on the other hand, are struggling to keep buyers interested as growing concerns of demand erosion continue to pressure price levels. Hog prices moved lower on the National Direct Afternoon Hog Report in active trade, falling $0.04 with a weighted average of $66.93 on 9,449 head. December corn is up 9 cents per bushel and December soybean meal is up $5.80 per ton. The Dow Jones Industrial Average is up 119 points and NASDAQ is down 18 points.

LIVE CATTLE:

Cattle futures regained composure during the last half of trade activity with firm underlying gains sweeping through the complex. October live cattle futures moved 95 cents higher, just shy of $126 per cwt once again. Although these prices were not able to break through last week's highs, the ability to test these price levels can be viewed as a success, given the growing uncertainty in the market this week. On feed estimates for feedlots as of October 1st are 99.3% year-ago levels. This would still account for a feedlot inventory level of 11.63 million head, and the second largest October inventory level on record. Traders are also optimistic that beef values will continue to stabilize, sparking potential additional support through the upcoming weeks. October live cattle closed $0.95 higher at $125.95, December live cattle closed $0.50 higher at $130.52 and February live cattle up $0.60 at $135.60. Cash cattle trade started to develop through the morning Wednesday and continued during the afternoon. By the end of the day, it is expected that trade activity will have been light to moderate with at least some activity in most areas. Live trade is reported at $124 per cwt in the North and South, with dressed trade in the North at $196 per cwt. These prices are steady with last week's average and could be enough to set the tone for steady money for the week. Asking prices on cattle still yet to be sold are at $126 and higher in the South and $198 to $200 dressed in the North. There is a push for higher prices through the week, but the lack of early support may limit upward movement of cash prices for this week at least. The Fed Cattle Exchange Auction Wednesday listed a total of 2,757 head, of which none actually sold, 362 were scratched from the auction and 2,395 head were listed as unsold, as they did not meet the reserve prices that ranged from $121 to $126. Opening prices ranged from $120 to $122, high bids ranged from $123 to $124. The state-by-state breakdown looks like this: Texas 1,137 total head, all of which went unsold; Kansas 1,299 total head, with none sold, 937 head went unsold and 362 were scratched from the auction; South Dakota 252 total head, all of which went unsold; Nebraska 69 total head, all of which went unsold.

Wednesday's slaughter is estimated at 121,000 head, 1,000 more than a week ago and 2,000 more than year ago totals.

Boxed beef prices closed mixed: choice down $0.85 ($280.03) and select up $1.27 ($262.80) with a movement of 128 loads (76.43 loads of choice, 19.93 loads of select, 7.13 loads of trim and 24.42 loads of ground beef).

THURSDAY'S CASH CATTLE CALL: Steady. Cash cattle trade started to develop Wednesday. Although there seems to be ample feeders holding out for potentially higher money later in the week, the trend over the past few weeks of prices set midweek gives less hope that active gains may develop over the next couple of days.

FEEDER CATTLE:

Feeder cattle prices rebounded midweek following a four-day market slide, which seemed to help rekindle buyer support in nearby and deferred futures. Following mixed trade early Wednesday morning, the evidence of more buy orders moving into the pressured market helped to instill additional gain and pushed deferred futures to triple-digit gains. Traders remain generally cautious given the upcoming cattle on feed report on Friday. Bad memories following the September report continue to haunt most industry watchers, with uncertainty of just how traders will react to any adjustments in placement numbers. It would not be out of character for placement numbers to be above analyst expectations, but for now, traders are focusing on rekindling underlying support through the cattle complex. October feeders closed $0.82 higher at $155.92, November feeders closed $0.50 higher at $159.35 and January futures closed $1.25 higher at $160.47. The CME Feeder Cattle Index for Oct. 19: $154.03, down $0.07.

LEAN HOGS:

Hopes of the lean hog futures market digging out of the early October market slide have been dashed, as firm selling has redeveloped in all contracts and broke through last week's lows. December futures have quickly broken below $77 per cwt with February closing below $80 per cwt following triple-digit losses in nearby contracts. The lack of underlying commercial trader support is also impacting the interest of noncommercial traders, who seem to be content on the sidelines at this point. Although it currently appears that September lows of are still safe as underlying support levels, the concern that additional market weakness in pork values and lack of export sales interest could add to the selling activity late in the week. December lean hogs closed $1.37 lower at $76.02, February lean hogs closed $1.22 lower at $79.22 and April lean hog futures closed $0.97 lower at $83.42. Pork prices worked lower following another day of volatile primal cut moves. An $18 per cwt rally in Ham cuts was overshadowed by a $28 per cwt loss in belly cuts. Pork cutouts totaled 397.40 loads with 355.11 loads of pork cutouts and 42.29 loads of trim. Pork cutout values: down $2.40, $96.87. Wednesday's slaughter is estimated at 478,000 head, 5,000 higher than a week ago and 15,000 lower than a year ago. The CME Lean Hog Index for Oct. 19: down $0.74, $85.89.

WEDNESDAY'S CASH HOG CALL: Steady. Despite stability in futures and pork values, it appears that cash values are still having a hard time turning the corner and posting consistent gains at this point.

Wednesday Midday Livestock Market Update - Hog Futures Continue Lower

GENERAL COMMENTS:

Light trade is seen in all livestock futures Wednesday morning. The development of cash cattle trade in Texas at steady money is creating hopes that prices may continue to strengthen as the week continues. Cattle futures are mostly higher, offsetting early week softness, while follow-through pressure in hog markets has now moved through initial support levels. This could leave hog markets vulnerable to additional liquidation in the next couple of days. December corn is up 5 1/4 cents per bushel and December soybean meal is up $4.50 per ton. The Dow Jones Industrial Average is up 280 points with Nasdaq up 11 points.

LIVE CATTLE:

Trade is mixed in live cattle futures Wednesday morning. Traders are focusing on limited market movement at midweek. Nearby contracts are slightly above last week's lows, which may indicate traders trying to establish a more stable range. Analyst expectations for Friday's Cattle on Feed report are a 0.7% drop in overall on-feed numbers compared to a year ago. Marketings are expected to see the most significant drop, with 97.2% of last year's level reported in September. Traders are starting to adjust positions to these levels, but these shifts could be seen until closing bell Friday. Cash cattle interest is developing Wednesday morning. Bids are available in all areas with packers offering $124 live basis in the South and $125 live basis and $196 dressed basis in Nebraska. Light trade has developed in Texas at $124 per cwt, but it appears most feeders are holding out for higher money. The $124 per cwt trade is fully steady with last week's average. If the opportunity to move prices higher is there, now appears to be the time to make it happen. The Fed Cattle Exchange Auction on Wednesday listed a total of 2,757 head, of which none actually sold, 362 were scratched from the auction and 2,395 head were listed as unsold, as they did not meet the reserve prices, which ranged from $121 to $126. Opening prices ranged from $120 to $122, high bids ranged from $123 to $124. The state-by-state breakdown looks like this: Texas 1,137 total head, all of which went unsold; Kansas 1,299 total head, with none sold, 937 head went unsold and 362 were scratched from the auction; South Dakota 252 total head, all of which went unsold; Nebraska 69 total head, all of which went unsold. 

Wednesday morning's boxed beef prices are mixed in moderate trade, with choice cuts $0.37 lower at $280.51 and selects up $1.47 at $263.00 on a total count of 77 loads. 

Dow Jones estimated Wednesday's cattle slaughter at 121,000 -- 1,000 more than a week ago and 2,000 more than year ago levels.

FEEDER CATTLE:

Traders in the feeder cattle complex are trying their best to regain market composure following early week losses. Most contracts are higher at midday, with the most active support seen in January and March. The focus on limited movement in live cattle trade, combined with uncertainty as to how the upcoming Cattle on Feed report will impact trade has helped draw buyers back into the market. But it is going to be a difficult task to push prices significantly higher over the next couple of days with markets likely to wander within a moderate trading range. Cash feeder cattle auctions continue to see increased volume, although price levels are unevenly mixed. Last week's national feeder cattle summary posted prices generally $2 lower to $3 per cwt higher with overall demand described as moderate to good. Variability of cattle being sold continues to be the biggest focus on price levels at this point. The CME Feeder Index was priced at $154.10 for Oct. 18.

LEAN HOGS

Moderate pressure is seen early Wednesday morning. This selling has left additional softness through the entire complex. Although losses for the day have been kept in check, the most recent shift lower has moved through support levels. December contracts have broken below $77 per cwt, while February contracts are at $80 per cwt. A close at these levels will offset recent market support and could open the door for additional underlying pressure over the next two weeks. Although limited stability is starting to emerge in cash and pork values, the lack of buyer support in the futures market may test further market lows over the upcoming days. Cutouts are up $1.74 at $101.01 Wednesday morning on 167.30 loads. Negotiated hog prices are $0.35 lower at $66.21 on 6,159 head on the morning report. Dow Jones estimated Wednesday's hog slaughter at 478,000 -- 1,000 more than a week ago and 12,000 less than year ago levels. The CME Lean Hog Index is listed at $85.89 per cwt for Oct. 18.