GENERAL COMMENTS:
The livestock complex was pleased with Wednesday's WASDE report, which helped spur the contracts higher before close. Heading into Thursday's market, both the beef and pork markets will be closely watching to see how Thursday's export data fared for the week. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $2.41 with a weighted average of $90.29 on 13,812 head. December corn is steady and December soybean meal is steady. The Dow Jones Industrial Average is down 28.34 points.
LIVE CATTLE:
The live cattle market closed mostly higher as the complex was pleased with Wednesday's WASDE report and is anxiously waiting to see what the cash cattle market gets done this week. As we sit here Wednesday afternoon still wondering what bid it's going to take to sell cash cattle this week, there's one obvious point that can be draw from the market over the last months, the fact feedlots are gaining more of the market's leverage. Feedlots are pushing for higher prices again this week and seeming willing to roll their inventory over to next week if they don't get the money they want. Southern feedlots are firm at $146 to $147, and the North has yet to price their cattle. Trade should begin sometime Thursday as it did last week. October live cattle closed $0.37 higher at $146.17, December live cattle closed $0.12 lower at $148.45 and February live cattle closed $0.25 higher at $152.12.
Wednesday's slaughter is estimated at 128,000 head, steady with a week ago and 10,000 head more than a year ago.
Wednesday's WASDE report shared mostly supporting news to the beef and cattle markets. Beef production for 2022 was raised as both the third and fourth quarters expect larger production than what was originally anticipated a month ago. This hike in production stems from aggressive throughput in the packing sector, along with heavier carcass weights. 2022's production rose by 130 million pounds from last month's report. The third quarter's average steer price gained $0.42 from September's report to average $143.42, and fourth quarter steer prices are now expected to average $148.00, which is a $1.00 increase from last month. Both the first and second quarters of 2023 are unchanged for price projections as in the first quarter of 2023 steers are expected to average $151, and in the second quarter $152. Beef imports for 2022 fell by 25 million pounds, while beef exports grew by 10 million pounds.
Boxed beef prices closed mixed: choice down $0.09 ($246.66) and select up $1.41 ($214.26) with a movement of 128 loads (72.86 loads of choice, 27.83 loads of select, 10.36 loads of trim and 16.55 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: $2.00 to $3.00 higher. Given that feedlots still haven't sold at this point, they know that they sit in the driver's seat of this week's cash market.
FEEDER CATTLE:
With the nearby corn contracts closing steady to somewhat lower, the feeder cattle market was given an opportunity to push higher. October feeders closed $0.42 higher at $175.50, November feeders closed $0.47 higher at $176.67 and January feeders closed $0.17 higher at $176.90. It helped that the live cattle market traded higher throughout the later half of the day, but largely the feeder cattle market's strength came from the fact that corn was lower and that some sales in the countryside have been stronger as buyers are realizing that October may not see the big calf run that it normally does, as drought pushed producers into marketing earlier than normal. At Winter Livestock Auction in Dodge City, Kansas, compared to last week, feeder steers weighing 600 to 925 pounds sold $8.00 to $14.00 higher. Steer calves weighing 300 to 600 pounds traded $7.00 to $10.00 lower. Heifers weighing 400 to 900 pounds sold unevenly steady. Demand was good for steers weighing over 600 pounds, otherwise it was just moderate. Slaughter cows traded $4.00 to $5.00 lower, and slaughter bulls sold $4.00 to $5.00 lower. Feeder cattle supply over 600 pounds was 62%. The CME Feeder Cattle Index for Oct. 11: up $0.40, $175.04.
LEAN HOGS:
The lean hog market closed higher Wednesday afternoon as the market charged higher thanks to a neutral to somewhat supportive WASDE report, and thanks to continued support from stronger slaughter speeds and good demand in the cash market. December lean hogs closed $1.17 higher at $80.70, February lean hogs closed $0.82 higher at $81.87, and April lean hogs closed $0.65 higher at $85.55. The pork cutout value was able to close higher thanks to continued support in butts, gained $7.20 from Tuesday's close. Pork cutouts totaled 272.74 loads with 240.19 loads of pork cuts and 32.55 loads of trim. Pork cutout values: up $0.79, $103.94. Wednesday's slaughter is estimated at 491,000 head, 4,000 head more than week ago and 17,000 head more than a year ago. The CME Lean Hog Index for Oct. 10: down $0.03, $92.95.
Wednesday's WASDE report shared mixed news for the hog complex. Pork production for 2022 grew by 15 million pounds from September's report as slaughter speeds have been running more aggressively than originally assumed for the third quarter. The third quarter saw a slight price reduction as third-quarter prices are now expected to average $71.30, as opposed to $73.80, which was September's projection. Barrow and gilt prices in the fourth quarter saw a minor reduction as they're now anticipated to average $71.08, as opposed to September's projection of $71.30. Pork imports for 2022 were reduced by 20 million pounds, but exports also fell by 105 million pounds.
THURSDAY'S CASH HOG CALL: Lower. Given that packers have supportive the cash market for two days in a row, paying more money on both Tuesday and Wednesday, it's likely that they're less aggressive come Thursday.
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