GENERAL COMMENTS
It was a mixed day for the livestock complex as the live cattle market endured immense pressure, the feeder cattle market traded higher earlier in the day but ultimately closed lower and the lean hog market successfully closed mostly higher. Hog prices closed higher on the Daily Direct Afternoon Hog Report, down $0.48 with a weighted average of $87.70 on 12,019 head. December corn is down 3 cents per bushel and December soybean meal is down $1.70. The Dow Jones Industrial Average is down 646.89 points.
DTN'S WASDE COMMENTS:
Wednesday's WASDE report was mostly supportive for the cattle and beef markets. Beef production for 2022 was raised by 211 million pounds, as aggressive throughput on fed cattle, combined with heavier carcass weights, contributes more beef to the market. Beef production for 2023 was decreased by 90 million pounds as the market expects fewer cows to be slaughtered and there to be tighter fed cattle supplies. Quarterly steer prices for 2022's fourth quarter jumped by $4.00 from last month to average $152.00. First-quarter 2023 steer prices are anticipated to average $153 (up $2.00 from last month) while second quarter prices in 2023 are anticipated to average $154 (also up $2.00 from last month).
Beef imports for 2022 fell by 13 million pounds, but exports also fell by 29 million pounds as the Asia markets aren't expected to buy as aggressively through the end of the year. Beef imports for 2023 remained steady at 3,350 million pounds and exports held steady at 3,070 million pounds.
Wednesday's WASDE report shared mostly supportive news for both the pork and hog markets. Pork production for 2022 was decreased by 27 million pounds as recent production speeds have waned. Quarterly hog prices for the fourth quarter of 2022 gained $1.00 from last month to average $64.00. Hog prices in the first quarter of 2023 are expected to average $63.00, and prices in the second quarter of 2023 are expected to average $71.00, both of which were steady with last month's report. Pork imports for 2022 fell by 53 million pounds, exports grew by 20 million pounds. For 2023, pork imports fell by 95 million pounds, but exports remained steady.
LIVE CATTLE:
Wednesday's market was a bit of bust for the spot December contract as, even though traders expected to see a reduction in exports on Wednesday's WASDE report, the validation of seeing it sent the contracts lower and pressured the cash market too. December live cattle closed $1.47 lower at $151.57, February live cattle closed $0.62 lower at $154.15 and April live cattle closed $0.47 lower at $157.77. Packers strategically used the day's technical downspin to pressure cash as some Southern cattle traded for $150 and a light movement of Northern cattle sold for $242, both steady with last week's market. The North still needs to trade quite a few more cattle and it wouldn't surprise me to see prices remain steady with the week or etch somewhat higher.
Wednesday's slaughter is estimated at 129,000 head, steady with a week ago and 6,000 head more than a year ago.
Boxed beef prices closed lower: choice down $0.27 ($264.67) and select closed $0.83 ($235.22) with a movement of 142 loads (94.38 loads of choice, 16.79 loads of select, 19.72 loads of trim and 10.91 loads of ground beef). The choice/select spread sits at $29.45.
THURSDAY'S CATTLE CALL: Steady to $1.00 higher. Some cattle may have traded, and packers tactically used the day's weakness and their moderate arsenal of deferred cattle supplies to push the cattle market lower. The North still needs to trade more cattle and Northern feedlots work the cash market forcefully.
FEEDER CATTLE:
You would have thought that feeder cattle would have been able to maintain their earlier rally through the day's end, as the corn market posed no threat, but with the live cattle sector ending on a weaker note and with cash cattle trading steady, a softer close was in store for the market. January feeders closed $0.25 lower at $179.65, March feeders closed $0.35 lower at $181.80 and April feeders closed $0.12 lower at $185.15. While looking through various sale barn reports this afternoon, there were multiple sales canceled in South Dakota because of bad weather.
At Philip Livestock Auction in Philip, South Dakota, compared to last week, feeder steers under 450 pounds traded $2.00 to $3.00 lower, steers weighing 450 to 600 pounds traded $6.00 lower, steers weighing 600 to 700 pounds traded $2.00 to $3.00 lower. Feeder heifers under 450 pounds sold $2.00 to $4.00 lower, but those weighing 450 to 700 pounds sold steady. Feeder cattle supply over 600 pounds was 20%. The CME Feeder Cattle Index for Nov. 8: down $0.29, $176.30.
LEAN HOGS:
The lean hog complex continued to trade lower in its spot December contract while the rest of the nearby months advance onward. Wednesday's WASDE report was fairly supportive to the market as it showed higher fourth quarter hog prices, higher exports for 2022 and lower imports. December lean hogs closed $0.30 lower at $85.27, February lean hogs closed $0.65 higher at $89.15 and April lean hogs closed $0.42 higher at $94.62. It was disappointing to see pork cutouts close lower, but at least the cash market closed higher and hopefully Thursday's export report shares another strong sale. Pork cutouts total 339.66 loads with 303.21 loads of pork cuts and 36.44 loads of trim. Pork cutout values: down $1.02, $94.12. Wednesday's slaughter is estimated at 493,000 head, 5,000 head more than a week ago and 14,000 head more than a year ago. The CME Lean Hog Index for Nov. 7: down $0.50, $90.28.
THURSDAY'S HOG CALL: Lower. Given that the cash hog market has now seen support for two days this week, it's likely that packers have fulfilled most of their needs for the week.
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