GENERAL COMMENTS:
Cattle futures have spent the Friday session so far in higher territory, either following gains of $1 to $2 in cash cattle trade this week, and/or anticipating a bullish Cattle on Feed report coming later Friday afternoon. Feeder cattle futures up $0.60, too, are keeping pace with the resilient demand noted for calves this fall. Lean hog prices, meanwhile, down $1.00 for some contracts, have been able to pull back Friday as packers have encountered sufficient supply of market weight hogs. December corn is down 1/4 cents per bushel and December soybean meal is up $2.90. The Dow Jones Industrial Average is up 40 points.
LIVE CATTLE:
The live cattle futures market is maintaining a bullish mood in anticipation of the monthly Cattle on Feed report to be released Friday afternoon. December live cattle are up $0.30 at $153.05, February live cattle are up $0.425 at $155.85 and April live cattle are up $0.35 at $159.25. The futures trading volume so far during the last half of this week has been relatively quiet, suggesting the bullish narrative about lower inventories in feedlots isn't a big surprise to anyone and isn't necessarily attracting fresh new trading interest. Rather, the upward movement in futures prices may simply be the result of no one wanting to step in front of a charging bull and act as a seller at these prices yet. Cash cattle trade on Thursday came in $1 to $2 higher than last week's weighted averages for the Southern Plains, with both steers and heifers out of Kansas trading at $151 to $152 and out of Texas at $151. Dressed deals in Nebraska were marked at $242, steady with last week. Packers are therefore keeping the lines going at a seasonally appropriate pace, and Friday's slaughter is estimated at 121,000 (3,000 more than a week ago and steady with a year ago), followed by a Saturday kill of 42,000 head (8,000 more than a week ago and 27,000 fewer than a year ago).
Boxed beef prices are mixed Thursday morning: choice down $2.39 ($254.71) and select up $0.67 ($232.41) with a movement of 96 loads (40.15 loads of choice, 8.06 loads of select, 5.97 loads of trim and 41.79 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures contracts are being pulled upward by the magnetic force of the live cattle market's bullishness. January feeders are up $0.575 at $180.55, March feeders are up $0.35 at $182.85 and April feeders are up $0.20 at $185.975. While this doesn't bring the March contract back even as high as last week's high ($184), yet, this market will eventually have an opportunity to weigh its own bullish reaction to the monthly Cattle on Feed report. Lower placements may start to indicate the dearth of supply out in the countryside now that most of the drought-motivated selling has already taken place. There is also the constantly dwindling beef cow herd to consider, so futures traders will continue to look at the contracts for mid-2023 and beyond with a bullish bias. Meanwhile, strong demand at countryside sale barns continue to support the Feeder Cattle Index that underpins the nearby January futures contract.
LEAN HOGS:
Lean hog futures are experiencing a relatively mild pullback Friday after four straight days of gains in some of the contracts. December lean hogs are down $0.70 at $84.275, February lean hogs are down $1.125 at $89.675 and April lean hogs are down $0.825 at $95.175. The large estimations for Friday and Saturday's slaughter numbers may indicate that packers have finally been able to source market-weight hogs without having to scramble too much -- Friday's kill is seen at 489,000 head (40,000 more than a week ago and 15,000 more than a year ago). Saturday's kill is projected at 149,000 head (68,000 more than a week ago but 84,000 fewer than a year ago at this typically busy time). Most outside markets are staying pretty quiet Friday and letting the livestock markets trade their own fundamentals, although sharply lower energy prices, with crude oil falling below $80 per barrel, may be a warning of bearish consumer attitudes that could serve as a warning for the relatively "expensive" price tags on meat products and the animals that produce them.
The projected CME Lean Hog Index for Nov. 16 is down $0.08 at $88.14, and the actual index for Nov. 15 was down $0.31 at $88.22. Hog prices were lower in Friday's Daily Direct Morning Hog Report, with the weighted average price $81.76 down $1.36 on 3,716 head. Base prices ranged from $80 to $90, bringing the 5-day rolling average to $83.87. Pork cutouts total 219.55 loads with 207.45 loads of pork cuts and 12.09 loads of trim. Pork cutout values: up $2.42, $95.05.
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