GENERAL COMMENTS:
Sharp losses developed in live cattle and lean hog futures Thursday afternoon. Following a move below initial support prices in nearby hog trade Wednesday, active market liquidation developed, pushing nearby prices another $2 to $3 per cwt lower through the Thursday session. Live cattle losses didn't match the pressure of hog trade, but still worked lower the session. Hog prices moved lower on the National Direct Afternoon Hog Report in moderate trade, falling $1.50 with a weighted average of $65.43 on 7,858 head. December corn is down 9 cents per bushel and December soybean meal is down $4.40 per ton. The Dow Jones Industrial Average is down 6 points and NASDAQ is up 94 points.
LIVE CATTLE:
Cattle futures backed away from previous gains as traders focused on the aggressive pressure in outside markets. With grain markets showing significant losses, as well as widespread liquidation in lean hog trade, the focus Thursday seemed to be based on protection taking measures. Given the recent support in live cattle futures, prices are hovering in the top one-third of the market range, but the inability to keep October futures above $125 per cwt and December contracts at $130 per cwt or higher has become a difficult task. Even though this is not where market technical resistance is, there remains significant psychological resistance at these price levels. It is the hope that a bullish cattle on feed report would help to break these mental barriers in all nearby contracts. October live cattle closed $0.97 lower at $124.97, December live cattle closed $0.97 lower at $129.55 and February live cattle down $0.82 at $134.77. Cash cattle markets were quiet through most of the day, although limited deals were reported in the North through the second half of the day. Prices remain steady with midweek trade and last week's market average, as live cattle in most areas have traded at $124 per cwt, while dressed deals are at $196 per cwt. Some clean up activity may develop Friday, but for the most part, cash markets appear to be essentially done for the week. The Special Fed Cattle Exchange Auction held Thursday 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's slaughter is estimated at 120,000 head, 1,000 more than a week ago and 2,000 more than year ago totals.
Boxed beef prices closed mixed: choice up $0.63 ($280.66) and select down $0.08 ($262.72) with a movement of 158 loads (97.13 loads of choice, 21.04 loads of select, 10.97 loads of trim and 29.20 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Following light to moderate cash trade Wednesday and additional trade in the North Thursday afternoon at steady money, it is expected that the tone for the market has already been set. Some clean-up activity may develop Friday, but most parties appear to be willing to hold any additional needs or cattle until next week.
FEEDER CATTLE:
Feeder cattle trade was the most stable of all livestock markets with prices mixed within a narrow to moderate trading range Thursday afternoon. Traders seem to have adjusted positions in front of the upcoming cattle on feed report Friday afternoon, but there still may be some market shifts developing Friday morning. October and deferred futures trickled higher, while November through April contracts quickly reacted to pressure in live cattle trade. The pullback in corn prices was not enough to offset active live cattle market losses Thursday. Traders continue to look for a slight increase in placements from last year's numbers, but a major shift from these levels could bring about significant price adjustments next week. October feeders closed $0.32 higher at $156.25, November feeders closed $0.27 lower at $159.07 and January futures closed $0.47 lower at $160.00. The CME Feeder Cattle Index for Oct. 19: $154.03, down $0.07.
LEAN HOGS:
Sharp triple-digit losses flooded into lean hog futures trade, as traders hit the panic button following a break below short=term support Wednesday. The overall lack of new buying from China in the morning export sales report sparked additional market uncertainty as traders remain very concerned about the ability to sustain and improve pork demand over the upcoming months. All contracts through May 2022 posted losses between $2 and $3 per cwt, causing further market pressure through the complex. Longer term support in spot month December contracts remains just above $72 per cwt. With current prices just $1 per above this support level, the potential for markets to add further technical weakness in the upcoming days is becoming more realistic. The trade's attention has totally moved away from tight supply issue seen late September, with traders consumed with pork demand uncertainty. December lean hogs closed $2.85 lower at $73.20, February lean hogs closed $2.55 lower at $76.67, and April lean hog futures closed $2.30 lower at $81.12. Pork prices shifted higher following double-digit gains in belly prices. Pork cutouts totaled 291.68 loads with 259.68 loads of pork cutouts and 32.00 loads of trim. Pork cutout values: up $1.41, $98.28. Thursday's slaughter is estimated at 479,000 head, 2,000 higher than a week ago and 8,000 lower than a year ago. The CME Lean Hog Index for Oct. 20: down $1.06, $84.83.
FRIDAY'S CASH HOG CALL: Steady to $1 lower. Aggressive pressure in futures trade is expected to spill through the cash markets over the next week. This could lead to additional weakness for late October cash sales
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