GENERAL COMMENTS:
Gains in livestock trade were focused on the moves higher in feeder cattle trade. The buyer interest moving into the market is impressive, but this is leading to a significant rally over the last week that could help to spark even larger, long-term market moves in all cattle trade. October futures broke above $160 per cwt, gaining nearly $8 per cwt to the market price since hitting market lows a week ago. Live cattle futures posted slightly less market support, but still closed with triple-digit gains Thursday. Although gains in hog trade were narrow, the break from weaker moving prices was encouraging. Hog prices moved higher on the National Direct Afternoon Hog Report in moderate trade, adding $0.17 with a weighted average of 70.18 on 7,268 head. December corn is up 1 3/4 cents per bushel and December soybean meal is down $3.40 per ton. The Dow Jones Industrial Average is up 337 points and NASDAQ is up 152 points.
LIVE CATTLE:
Gains were seen in live cattle futures trade along with the aggressive gains in feeder cattle trade. October live cattle futures posted a $1.45 per cwt rally, moving above $125 per cwt, while December contacts topped $130 per cwt for the first time in over a month. Following significant pressure and uncertainty, live cattle futures prices are now back above levels seen before the Labor Day holiday. In some ways, the month of September seemed to be more of a "throwaway" month for the cattle market, which typically bottoms around Labor Day and then continues to post gains through the end of the year. With the month of October well underway, it is possible that cattle trade may try to make up lost ground over the near future. Even though overall momentum and buyer support is returning to the market, the reality is that cattle numbers remaining higher than expected and larger than year-ago levels could keep prices from continuing higher long term. October live cattle closed $1.40 higher at $125.27, December live cattle closed $1.87 higher at $130.10, and February live cattle closed $1.27 higher at $134.65. Cash cattle markets remained quiet Thursday following moderate to active trade in all areas Wednesday. Prices are seen steady to firm with trade at $124 in the South and $196 dressed in the North. These prices are steady with last week's average in Texas and Nebraska, while $1 per cwt higher in Kansas. Although most of the needed trade is expected to have already been committed, some clean-up activity may develop Friday.
Thursday's slaughter is estimated at 120,000 head, 1,000 less than a week ago and 3,000 more than year ago totals.
Boxed beef prices closed mixed: choice down $1.32 ($285.30) and select up $1.53 ($264.44) with a movement of 185 loads (118.44 loads of choice, 22.78 loads of select, 12.93 loads of trim and 31.33 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. It appears the lion's share of trade is done for the week, although a few clean up deals could develop Friday. Prices are expected to remain steady with earlier week trade and generally steady with last week prices.
FEEDER CATTLE:
Aggressive late-day momentum continued to add to the market support seen through the morning. Although there remains some limited concerns following last week's market losses, aggressive buyer support has flooded the complex, helping to post aggressive triple-digit gains in all contract months. Spot October futures have now rallied nearly $8 per cwt in the last week, capped by a $3.55 per cwt rally Thursday. The daily move higher was the largest one-day market gain of the year, outpacing the May 10 rally of $3.52 per cwt in the October contract. The upward market swing is not unexpected given the oversold status of cattle trade last week. The concern is that uninhibited buying during the week may have shifted the pendulum to in the other direction. This has the potential to create even more volatility until a market balance has been reached. However, given the wide market swings in outside markets, it is possible that further market swings may develop in the coming days. October feeders closed $3.55 higher at $160.35, November feeders closed $3.47 higher at $161.60 and January futures closed $2.47 higher at $161.25. The CME Feeder Cattle Index for Oct. 6: $153.80, up $0.92.
LEAN HOGS:
Lean hog futures trickled higher Thursday as traders seem to be finally tired of the selling pressure that consumed the market during the week. October futures posted a 22-cent gain, although the focus in the livestock market was squarely placed on cattle trade and feeder cattle markets specifically. With that said, overall volume and activity in the hog complex remained sluggish at best. If this is truly the end of the market correction that followed aggressive gains last week, traders seem to be very comfortable with a longer-term market plan, which appears to be holding around $90 per cwt in spot October contracts and $82 to $85 per cwt in December contracts. The focus on limited weekly export sales last week and disappointing sales to China is not a shock to the market, but a is a stark reminder that the success of our pork industry and market support cannot rely on China, as their production is ramping back up from previous years' levels. That could help to add even more support to the tighter hog supply levels that are starting to become a reality through the end of 2021 and well into 2022. October lean hogs closed $0.22 higher at $89.85, December lean hogs closed $0.30 higher at $82.02, and February lean hog futures closed $0.22 higher at $84.35. Pork prices trickled lower following the most significant pressure in ham cuts. Pork cutouts totaled 366.96 loads with 333.98 loads of pork cutouts and 32.97 loads of trim. Pork cutout values: down $0.60, $112.26. Thursday's slaughter is estimated at 478,000 head, 5,000 more than a week ago and down 10,000 from a year ago. The CME Lean Hog Index for Oct. 6: down $0.86, $92.59.
FRIDAY'S CASH HOG CALL: Steady. Packers continue to be able to fill expected processing schedules without significant efforts, even though tighter hog supplies will continue to be a factor for an extended period of time. This will likely limit near-term cash market support, despite the recent support seen in futures trade and some pork values.
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