Wednesday, September 30, 2020

Wednesday Closing Livestock Market Summary - Lean Hog Support Carries Through the Day

 GENERAL COMMENTS:

Wednesday was eventful for the livestock complex as the lean hog market absorbed unforeseen support and the market's cash cattle trade developed $2.00 stronger throughout both the Northern and Southern Plains. Heading into Thursday, there's a lot of pressure in the lean hog market waiting for Thursday's export report. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.55 with a weighted average of $64.47 on 8,341 head. December corn is up 14 1/4 cents per bushel and December soybean meal is up $10.90. The Dow Jones Industrial Average is up 329.04 points and NASDAQ is up 82.26 points.

LIVE CATTLE:

The live cattle complex closed slightly lower in nearby contracts, but kept some of the deferred contracts higher through the day's close. Worrying about corn prices affected the feeder cattle market, but put a halt on the live cattle complex's rally that the day initially started with. October live cattle closed $0.35 lower at $108.55, December live cattle closed $0.77 lower at $112.35 and February live cattle closed $0.35 lower at $115.87. Tuesday's rally was substantial in the fact that it pushed total open interest to 303,540 positions, which hasn't been achieved since March of earlier this spring. Some cash cattle trade developed in parts of the North as cattle sold for $167, $2.00 higher than last week's average. And late in the day, the Southern Plains sold cattle for $107 in Texas and Kansas. Wednesday's slaughter is estimated at 120,000 head, steady with a week ago and 1,000 head less than a year ago.

The Fed Cattle Exchange Auction listed a total of 901 head, of which 358 actually sold, but 543 head were listed as PO (Passed Offer). The state by state breakdown looks like this: Kansas 142 total head (1 lot), with 142 head listed as PO ($104.00); Nebraska 214 total head (1 lot), with 214 head sold at $106.00; Texas 545 total head (3 lots), with 144 head sold at $106.00, and 401 head listed as PO ($104.00). The delivery date/weighted averages breakdown is as listed: one- to nine-day delivery: 543 head total, all passed, and one- to 17-day delivery 358 head total all sold at $106.00.

Boxed beef prices are higher: choice up $0.58 ($217.74) and select up $0.55 ($207.54) with a movement of 155 loads (88.05 loads of choice, 30.62 loads of select, 10.40 loads of trim and 26.18 loads of ground beef).

THURSDAY'S CASH CATTLE CALL: $2.00 higher. Seeing that both the North and South were able to achieve prices considered $2.00 higher than last week's trade, the rest of cattle country is going to push for higher prices as well.

FEEDER CATTLE:

Feeder cattle contracts initially panicked when corn prices shot higher after Wednesday's USDA Grain Stocks report shared lower than expected corn supplies. The complex shot lower in fear of how high input costs could grow and worried about the long-term trajectory of 2020's fourth quarter. With drought already being on the forefront of everyone's mind, paying close attention to corn prices will be a necessity. October feeder cattle closed $1.57 lower at $141.35, November feeder cattle closed $1.72 lower at $142.05 and January feeders closed $1.37 lower at $140.30. At OKC West Livestock Auction in El Reno, Oklahoma, compared to a week ago, feeder steers sold $1.00 to $4.00 higher with some high-quality load lots available. Heifers sold mostly steady with lots traded $2.00 higher. Steer and heifer calves sold weaker again this week, as buyers are leery of bawling calves with the temperature swings this time of year. The CME feeder cattle index for Sept. 29: up $0.36, $142.58.

LEAN HOGS:

As Wednesday clocks out for the day, the hog industry waits patiently for Thursday's export report. Upon hearing that Germany confirmed another two cases of African swine fever in some wild boars, Wednesday's markets shot up in hopes that export demand will soon rise. If Thursday's report neglects to show increased interest, the market will most likely be disappointed, but again, that doesn't mean that increased demand will not ever rise, it may just take some time. October lean hogs closed $0.42 higher at $72.80, December lean hogs closed $1.12 higher at $63.10 and February lean hogs closed $1.00 higher at $68.00. Pork cutouts totaled 310.05 loads with 273.72 loads of pork cuts and 26.22 loads of trim. Pork cutout values: down $0.38, $91.37. Wednesday's slaughter is estimated at 473,000 head, 14,000 head less than a week and year ago. The CME lean hog index for Sept. 28: up $0.49, $75.91.

THURSDAY'S CASH HOG CALL: Steady. Packers have plenty of hogs already committed, so a lot of Thursday's buying will rest on the excitement around Thursday's export report. If demand is high and traders dive into the futures market with thrilled emotion, the market could be higher. If Thursday's export report is disappointing, the market could easily scale lower.




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