GENERAL COMMENTS:
The live cattle complex dominated the livestock sector as the market closed higher in its nearby contracts and was able to see a healthy advancement throughout the cash cattle market as well. Meanwhile, the feeder cattle contracts drew back in fear of a lively corn market, and the lean hog market slid lower unable to muster any demand. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.62 with a weighted average of $63.19 on 8,035 head. December corn is up 13 3/4 cents per bushel and December soybean meal is up $4.00. The Dow Jones Industrial Average is down 257.03 points and NASDAQ is up 1.95 points.
LIVE CATTLE:
You can count on one hand the number of times the 2021 cash cattle market has seen bids north of $125, and by the way this market is moving, higher prices could be here to stay. One of the biggest contributing factors to whether the market will sustain these higher cash cattle bids or not rests on the processing speeds of packers. Luckily, this week's daily pace has clipped along at a vigorous 122,000 head/day rate, which means that another week of seeing at least 660,000 head processed is very likely. As packers run a brisk chain speed, front-end supplies continue to be worked through and, as feedlots do the math, they're seeing that leverage could begin to work its way into their favor. December live cattle closed $0.12 higher at $131.57, February live cattle closed $0.57 higher at $136.95 and April live cattle closed $0.27 higher at $139.37. With the December live cattle contract closing above the 100-day moving average ($131.21) a new plane of higher prices looks more and more attainable. There was a moderate movement of cattle throughout Wednesday's trade, where Northern dressed cattle sold for mostly $200 ($4.00 higher than a week ago) and Southern live cattle traded at mostly $126 ($1.00 to $2.00 higher). Wednesday's slaughter is estimated at 122,000 head, 1,000 head more than a week ago and 5,000 head more than a year ago.
The Fed Cattle Exchange Auction listed a total of 2,692 head, of which 394 actually sold, 517 were scratched from the auction and 1,781 head were listed as unsold, as they did not meet the reserve prices that ranged from $125 to $128. Opening prices were $124, high bids ranged from $124 to $125.75. The state-by-state breakdown looks like this: Texas 1,530 total head, with 394 head sold at $125.50 to $125.75, 871 head went unsold and 265 were scratched from the auction; Kansas 840 total head, all of which went unsold; South Dakota 252 total head, all of which were scratched from the auction. California 70 total head, all of which went unsold.
Boxed beef prices closed lower: choice down $1.13 ($283.63) and select down $0.85 ($261.69) with a movement of 162 loads (88.26 loads of choice, 44.76 loads of select, 7.93 loads of trim and 21.30 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady with the week's advancements. With the cash cattle market seeing a fancy $2.00 to $4.00 rally, it's likely that the market will trade within the range set for the week.
FEEDER CATTLE:
The feeder cattle market had a back-and-forth day until the afternoon came around and the corn complex mastered a $0.13 rally that dampened the overall morale in the feeder cattle sector. November feeders closed $1.30 lower at $158.47, January feeders closed $1.65 lower at $158.95 and March feeders closed $1.50 lower at $160.20. The spot November contract weakened to the point of closing below the 40-day moving average ($159.23) which the market had successfully overcome just Tuesday. It may seem strange that the feeder cattle market closed lower while fat cattle prices jumped substantially higher, and the live cattle contracts closer higher as well, but the market's cautious attitude isn't out of line as volatile swings have become the new norm and traders want full confidence before risking too much positioning. At McAlester Union Livestock Auction in McAlester, Oklahoma, compared to last week, steers under 500 pounds sold $6.00 to $7.00 higher, and steers over 500 pounds sold $2.00 to $3.00 lower. Heifer calves under 500 pounds traded $3.00 higher, while heifers over 500 pounds traded $1.00 to $3.00 lower. Slaughter cows sold $2.00 to $5.00 lower and slaughter bulls sold $4.00 lower. Of the 325 slaughter cows and bulls that sold, 71% of them went to packers. The CME Feeder Cattle Index for Oct. 26: up $0.53, $156.03.
LEAN HOGS:
As if pork bellies hadn't lost enough already this week, Wednesday's afternoon pork cutout values shared that bellies took another beating as they lost $18.05 by the day's close. Adversely, hams saw a $13.65 price jump by the end of the day, which makes perfect sense with the weather dipping into cooler temperatures and the holidays being right around the corner. Meanwhile, the futures market neglected to find any essence of support and closed lower. December lean hogs closed $0.60 lower at $71.97, February lean hogs closed $0.82 lower at $74.32 and April lean hogs closed $0.80 lower at $78.32. As the market panics to find buying interest from consumers, Thursday's export report is likely to have significant pull on the market. If the report happened to show greater exports, all would gladly welcome the finding, but with packers running lackadaisical processing speeds, it's unlikely that they've seen much interest develop.
Pork cutouts totaled 356.05 loads with 301.53 loads of pork cuts and 54.53 loads of trim. Pork cutout values: down $0.85, $93.47. Wednesday's slaughter is estimated at 480,000 head, 2,000 head more than a week ago and 8,000 head less than a year ago. The CME Lean Hog Index for Oct. 25: down $0.32, $82.66.
THURSDAY'S CASH HOG CALL: Lower. With the pork cutout value down $0.85, it's unlikely that packers hustle the cash hog market enough to raise the cash market.
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