GENERAL COMMENTS:
The livestock complex is trading mostly higher into Wednesday afternoon except for the undecided live cattle complex which is merely biting its nails waiting for cash cattle to trade. Meanwhile, both the lean hog and feeder cattle contracts are trading higher as their markets are seeing support and seemed encouraged by Wednesday's WASDE report. December corn is down 4 3/4 cents per bushel and December soybean meal is up $8.90.
The Dow Jones Industrial Average is up 110.26 points.
LIVE CATTLE:
The live cattle market has had a back-and-forth day, seeming completely undecided if its market should trade higher or sink lower. The problem is that the market has a decision to make: Should it trade higher and pressure the upper end of its recently developed trading range? Or drop lower even though the market's fundamentals are strong just to back away from resistance pressure? Given that the market is up against resistance pressure receiving support from the cash cattle market is inherently important right now. Thankfully the cash cattle market has yet to see any action develop as packers and feedlots are in a stiff standoff again this week. It's like that trade could wait to develop until Thursday as feedlots don't seem willing to budge on their asking price given that they know front end supplies are limited and will only become thinner in the weeks ahead. Asking prices in the South are noted at $146 to $147, and the North has yet to price their cattle. October live cattle are down $0.05 at $145.75, December live cattle are down $0.35 at $148.20 and February live cattle are down $0.02 at $151.80.
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.
The Fed Cattle Exchange Auction reported seven lots (six lots in Texas and one lot in Kansas), totaling 1,311 head of cattle, none of which sold. Opening prices were at $143, bids had a range of $143.50 to $144.50, but none of these bids met reserve prices of $145 to $146.
Boxed beef prices are higher: choice up $1.17 ($247.92) and select up $1.46 ($214.31) with a movement of 81 loads (46.29 loads of choice, 16.73 loads of select, 3.91 loads of trim and 13.91 loads of ground beef).
FEEDER CATTLE:
The feeder cattle market was holding its breath ahead of the release of Wednesday's WASDE report but upon seeing support for the live cattle complex and no wild changes for the corn complex, it deemed higher trade plausible. It's also helping that the corn market is seeing a minor regression heading into Wednesday afternoon as the market is steadily trading $0.05 back. The feeder cattle market is hoping that cash cattle can indeed trade higher again this week which will lend some additional support to feeders. October feeders are up $0.70 at $175.77, November feeders are up $0.42 at $176.57 and January feeders are down $0.10 at $176.62.
LEAN HOGS:
The lean hog complex is keeping with its rally as Wednesday's WASDE report shared mixed news for the market. The market was thankful to see stronger production forecasted for the remainder of the year, but I was surprised to see as aggressive a reduction in quarterly prices as there was. Nevertheless, the market is taking the good out of the report and rallying on as cash prices are higher at midday and pork cutout values are receiving support again. December lean hogs are up $0.62 higher at $80.15, February lean hogs are up $0.25 at $81.30 and April lean hogs are up $0.42 at $85.32.
The projected lean hog index for 10/11/2022 is down $0.46 at $92.46, and the actual index for 10/10/2022 is down $0.03 at $92.95. Hog prices are higher on the Daily Direct Morning Hog Report, up $3.21 with a weighted average of $87.37, ranging from $82.00 to $94.50 on 5,852 head and a five-day rolling average of $86.72. Pork cutouts 160.20 loads with 140.74 loads of pork cuts and 19.46 loads of trim. Pork cutout values: up $0.42, $103.57.
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.
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