GENERAL COMMENTS:
Sharp losses developed Thursday morning across the livestock futures trade. Even though buyer interest was quick to develop during the first three days of the week, these buy orders eroded, leaving way for a significant price gap that is creating end-of-the-week uncertainty. The upcoming Cattle on Feed report, which will be released Friday, is a dark cloud hovering over the market as traders try to prepare for report results as much as possible without over correcting positions.
Price pressure continued to develop through the entire trading session Thursday, which leaves some additional questions of how markets will open Friday.
Hog futures posted light to moderate gains in late day buying as the complex spent most of the trading session stuck in a very narrowly mixed trading session. Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.91 with a weighted average of $63.99 on 6,881 hogs. December corn closed up 4 at $4.748 and December soybean meal closed down $2.40 at $466.8. The Dow Jones Industrial Average is down 45.74 at 34,945.47.
LIVE CATTLE:
Live cattle futures moved lower through the Thursday trading session with one down day for the week nearly erasing firm positive moves in the market seen the rest of the week. This market swing makes it very evident that the market direction can change very quickly and drastically, leaving behind what was expected to be a market rebuild.
After what seemed to be traders ignoring the potential for another bearish Cattle on Feed report Friday, Thursday morning seemed to be the time when the uncertainty of cattle placement numbers and on-feed levels were focused on by the entire industry. The fact that last month's report sparked several weeks of market volatility in all cattle trade is adding even more anxiety to traders who are digesting pre-report estimates of higher on-feed numbers and lower marketing numbers. This would point to larger supplies during 2024 and potential less price support for the entire complex.
Cash cattle trade continued to develop Thursday following the lower trend seen midweek. Light trade reported in Kansas and Texas at $178 per cwt. This is $2 to $3 per cwt lower than last week, but combined with Northern trade midweek at $282 per cwt, $4 per cwt lower, steady market weakness is likely to be seen through the end of the week. There may be some additional trade as overall numbers appear to still be light. However, given the market volatility and report release Friday, the chance of a quiet end of the week could limit further activity. December live cattle closed $3.03 lower at $174.75, February live cattle closed $3.45 lower at $175.325 and April live cattle closed $3.38 lower at $177.1.
Thursday's slaughter is estimated at 119,000 head, 3,000 head less than a week ago and 11,000 head less than a year ago. Boxed beef prices closed lower: choice down $1.61 ($294.72) and select down $0.20 ($267.65) with a movement of 155.38 loads (84.31 loads of choice, 22.42 loads of select, 18.22 loads of trim and 30.43 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady to $4 lower. The lower trade seen already this week may have set the tone, which is likely to limit further upward market support.
FEEDER CATTLE:
Sharp losses flooded into feeder cattle trade with traders quickly turning away from early week gains and now squarely focusing on positioning contracts ahead of what could be another bearish cattle on feed report Friday. Pre-report estimates point to a 7% increase in placements, which would likely add further pressure to the market. But if enough correction is factored into the market, post report selling may be held to a minimum. Sharp $3 per cwt losses were seen in most contracts at closing bell, leading to concern of follow-through, end-of-the-week pressure.
November feeders closed $0.05 lower at $229.375, January feeders closed $3.40 lower at $227.5 and March feeders closed $3.40 lower at $230.1. The CME Feeder Cattle Index for Nov. 14: up $0.41, $228.76.
LEAN HOGS:
Lean hog futures inched higher in light buyer support following a day of narrowly mixed trade. Most of the focus was placed on cattle trade, allowing lean hog futures to wander within a narrow sideways range similar to seen all week. Little long-term direction is expected to be seen with most of the focus on outside markets and cattle trade.
December lean hogs closed $0.43 higher at $71.475, February lean hogs closed $0.73 higher at $75.625 and April lean hogs closed $0.20 higher at $81.45. Thursday's hog slaughter is estimated at 488,000 head, 19,000 head more than a week ago and 2,000 head less than a year ago. Pork Cutouts totaled 311.85 loads with 264.46 loads of pork cuts and 47.39 loads of trim. Pork cutout values are down $0.90 at $85.92. The CME Lean Hog Index for Nov. 14: down $0.07, $76.06.
FRIDAY'S HOG CALL: Steady to $1 lower. Continued pressure in fundamentals and limited direction in futures trade is likely to keep cash values soft heading into the end of the week.
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