GENERAL COMMENTS:
Active buying returned to the cattle complex Wednesday, with firm triple-digit gains holding through most of the session in nearby live cattle futures and most feeder cattle contracts. The ability to attract and sustain buyer interest following last week's market freefall is gaining momentum with traders focused on moving prices off short-term lows. There is still underlying concern ahead of Friday's Cattle on Feed report, but for now, traders seem to have already worked in the higher report expectations into the already subdued market prices.
Hog futures shifted lower with very light and limited early buying gaining even more momentum near closing bell with nearby futures closing $1 per cwt lower at the end of the trading session. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.73 with a weighted average of $63.08 on 4,865 hogs. December corn closed down 7 1/2 at $4.708 and December soybean meal closed down $4.40 at $469.2. The Dow Jones Industrial Average is up 163.51 at 34,991.21.
LIVE CATTLE:
Live cattle futures regained a sense of market momentum Wednesday with triple-digit gains seen in all nearby contracts. Live cattle futures have posted solid gains each of the past three trading sessions, helping to create and develop at least a short-term trend for further traders to follow over the coming days. The market had remained extremely oversold at the end of last week, which is leaving room for additional market support in nearby and deferred contracts. Very little has changed in beef market fundamentals, which could leave room for late week price pressure as traders adjust holdings in front of the Cattle on Feed Report. The expectation is that cattle on feed numbers will increase about 2% from last year, which may lead to end of the week price pullbacks.
Cash cattle trade has slowly developed in Nebraska Wednesday afternoon. At this point, it is not yet known if this is enough trade to set the tone for the week or not, but the lower price levels are getting significant attention. Dressed trade in Eastern Nebraska is reported at $282 per cwt, which is $4 per cwt lower than last week's weighted average. Live trade in Nebraska is also reported at $180 per cwt. Asking prices remain at $182 to $183 live basis in the South and $285 and higher dressed in the North. It is expected that significant trade will likely be delayed until Thursday or Friday. December live cattle closed $1.93 higher at $177.775, February live cattle closed $1.90 higher at $178.775 and April live cattle closed $1.68 higher at $180.475.
Wednesday's slaughter is estimated at 125,000 head, 1,000 head more than a week ago and 5,000 head less than a year ago. Boxed beef prices closed mixed: choice up $0.66 ($296.33) and select down $0.03 ($267.85) with a movement of 140.64 loads (78.99 loads of choice, 23.54 loads of select, 18.22 loads of trim and 19.89 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady to $5 lower. Early trade seen midweek at $4 per cwt lower has spooked the market despite higher futures prices. Nervousness in front of Friday's report seems to be keeping cash markets unsettled.
FEEDER CATTLE:
For the second trading session in a row, spot November contracts closed lower. This underlying pressure continues to focus on less interest in short-term direction, and the focus on potential market moves during early 2024. Given the fact that overall cow numbers have decreased through the year, overall cattle moving into feedlots for the entire year should be lower. This puts more emphasis on seasonality of cattle placements, rather than total overall supply levels. If more cattle are placed early in the season, (September and October) then it is expected that feeder cattle supplies will be tighter in the upcoming months. This is helping to draw buyers back into deferred contract, allowing for active triple-digit gains this week.
The average estimate for cattle placed in feedyards wis 107.1% year-ago levels. Analyst confidence in this number is relatively low with a range from 102.7% to 108.1%, indicating there is very little consensus of where analysts feel October placements will land. It is important to remember that last month's larger than expected placements sparked the market adjustment, and the ripple effect still being felt at this point. November feeders closed $0.63 lower at $229.425, January feeders closed $1.90 higher at $230.9 and March feeders closed $2.13 higher at $233.50. The CME Feeder Cattle Index for Nov. 13: down $0.29, $228.35.
LEAN HOGS:
Lean hog futures continued to post moderate price pressure through most of the session Wednesday, as increased selling developed in nearby contracts at closing bell. The overall softness in the complex has more to do with lack of fundamental support seen ahead of the Thanksgiving holiday, and traders are comfortably allowing prices to wander back and forth in the well-established trading ranges seen over the last three weeks.
December lean hogs closed $1.25 lower at $71.05, February lean hogs closed $1.03 lower at $74.9 and April lean hogs closed $0.53 lower at $81.25. Wednesday's hog slaughter is estimated at 487,000 head, 1,000 head less than a week ago and 3,000 head less than a year ago. Pork Cutouts totaled 273.34 loads with 235.15 loads of pork cuts and 38.19 loads of trim. Pork cutout values are down $0.78 at $86.82. The CME Lean Hog Index for Nov. 13: up $0.08, $76.13.
THURSDAY'S HOG CALL: Steady to $1 Lower. The combined impact of futures market erosion, falling cash values early in the week and limited fundamental market news, is expected to further erode cash values Thursday. This will be the last full week of slaughter before the Thanksgiving week holidays.
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