GENERAL COMMENTS:
Livestock futures were the bright spot of ag commodities Wednesday, with moderate to active gains seen in cattle and hog futures. Feeder cattle contracts posted the most aggressive in November contracts with gains over $2.50 per cwt, while early 2024 contracts also posted triple-digit gains. Even with the higher prices, the entire cattle market remains under technical pressure given the downturn over the last week. Lean hog futures posted uniform triple-digit gains in all nearby contracts as buyers are slowly returning following setting contract lows earlier in the week. Traders seem to still have additional room for nearby gains due to short covering continuing, but prices may show some resistance in further aggressive moves based on market fundamentals and outside market shifts. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.68 with a weighted average of $71.9 on 6,958 hogs. December corn closed down 4 at $4.80 and December soybean meal closed down $5.00 at $429.20. The Dow Jones Industrial Average is down 105.45 at 33,035.93.
LIVE CATTLE:
October live cattle futures led the complex higher midweek with gains over $1 at the closing bell. Although all other contracts posted moderate gains at best, the ability to hold early gains through the entire trading session seemed to be the difference from previous trading sessions. The concern of higher early gains is maintaining enough buy orders to continue to hold prices higher through the end of the day, but traders seemed willing to continue to move the meter higher as the day continued. This could quickly spark additional market support and price moves higher through the end of the week. Continued gains in feeder cattle trade and support from outside markets are likely needed to draw additional buyers. Cash cattle trade is becoming more evident Wednesday with trade at $290 in the North. These prices are generally $4 per cwt lower than last week, and within the general range of limited trade which occurred earlier in the week. Southern trade Wednesday remains quiet although bids of $180 to $182 per cwt are holding. Asking prices in the South remain at $185 per cwt. It is likely that some additional sales will be desired and likely needed before the end of the week, but it is uncertain just how willing packers will budge in order to gain these additional cattle. October live cattle closed $1.13 higher at $181.125, December live cattle closed $0.80 higher at $179.425 and February live cattle closed $0.65 higher at $181.5. Wednesday's slaughter is estimated at 126,000 head, steady with a week ago and unchanged from a year ago. Boxed beef prices closed mixed: choice up $1.52 ($307.5) and select down $2.34 ($281.66) with a movement of 141.20 loads (56.08 loads of choice, 31.94 loads of select, 32.03 loads of trim and 21.15 loads of ground beef).
THURSDAY'S CATTLE CALL: $3 to $5 Lower. Given cash trade has trickled in through the week, it is expected that prices may be established. Steady with early week trade, but $3 to $5 per cwt lower than last week.
FEEDER CATTLE:
Feeder cattle futures posted strong triple-digit gains in all contracts except spot October contracts. The upward movement in the complex continues to help reduce the significant pressure seen in the complex over the last week, but the overall tone of the feeder cattle market still remains generally weak. Traders have adjusted to the fact that current feeder cattle supplies are higher than expected, but it is still too early to tell if the pace of cattle placements is ahead of previous years. This will be the main focus of traders and market analysts over the next month as many try to get a better handle on the overall size of calf crop that will enter feedlots in 2023. The ability to hold prices above contract lows through the end of the week is likely to be considered a significant win and could help draw active buyer interest during early November. October feeders closed $0.55 higher at $239.975, November feeders closed $2.63 higher at $238.05 and January feeders closed $1.70 higher at $236.55. The CME Feeder Cattle Index for October 23: down $0.49, $241.63.
LEAN HOGS:
Firm gains quickly moved into lean hog futures trade with all nearby contracts posting and holding triple-digit gains Wednesday. The overall support across the complex continues to draw buyers back into the market following the recent technical sell-off. It is expected that current short covering activities may still continue, which could help to firm the tone of the market further, bringing additional optimism to the complex. December lean hogs closed $1.13 higher at $67.5, February lean hogs closed $1.23 higher at $70.7 and April lean hogs closed $1.23 higher at $76.775. Wednesday's hog slaughter is estimated at 486,000 head, 2,000 head more than a week ago and 1,000 head more than a year ago. Pork Cutouts totaled 299.31 loads with 256.35 loads of pork cuts and 42.96 loads of trim. Pork cutout values are up $1.00 at $87.59. The CME Lean Hog Index for October 24: down $0.40, $78.67.
THURSDAY'S HOG CALL: Steady. Cash hog prices are called steady early Thursday following the firmness in futures trade and pork cutout values, despite recent pressure in cash hog values.
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