GENERAL COMMENTS:
Live cattle futures continued to shift higher with triple-digit gains seen in nearby contracts Wednesday morning. Cattle futures have steadily moved higher through the week, marking three consecutive positive gains in live cattle and most feeder cattle trade. The overall support seen in the market is focused on buyers moving into what is considered an oversold market situation, although there are still concerns about how consistent additional support may be. Traders are also starting to slowly adjust for Friday's cattle on-feed report, with early analyst estimates pointing to an increase in on-feed numbers and placement numbers, while cattle marketings are likely to be reduced from year-ago levels.
Hog futures slipped slightly in the morning as Tuesday's losses created some additional concern about fundamental support heading into the Thanksgiving holiday. December corn is down 5 3/4 at $4.725 and December soybean meal is down $6.70 at $466.90. The Dow Jones Industrial Average is up 126.68 at 34,954.38.
LIVE CATTLE:
Firm triple-digit gains have steadily developed in nearby live cattle futures with December and February leading the complex higher at this point. Although gains are seen through the entire complex, most 2024 contract months are showing much less aggressive support, primarily based on the expected increase in cattle placement numbers in the cattle on feed report to be released Friday. If report numbers come in as early estimates predict, this would add beef supplies to the market through late spring to fall next year, which is the main cause for less aggressive buyer support to be seen. However, given the previous market weakness, the complex still remains generally oversold, which without a major upset in demand or significant supply surprises, is likely to help draw additional buyers to the complex in the coming days.
Cash cattle activity was still slow on Wednesday morning. Unless some additional significant shifts are seen, active trade is likely to be delayed until Thursday or Friday. Bids are quiet, although a few asking prices have redeveloped in the South at $183 per cwt. Asking prices in the North are still not established, but more asking prices may start to be seen before the end of the day. December live cattle are $1.48 higher at $177.325, February live cattle are $1.53 higher at $178.4, April live cattle are $1.40 higher at $180.2.
Boxed beef prices are higher: Choice up $2.61 ($298.28) and select up $1.41 ($269.29) with a movement of 67.85 loads (39.18 loads of choice, 10.01 loads of select, 4.65 loads of trim and 14.01 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures are mixed in light to moderate trade Wednesday morning. For the second trading session in a row, spot month November contracts are trading lower, while the rest of the complex is posting positive gains. Traders are actively rolling out of November futures and into early 2024 contract months. The expected larger placement of feeder cattle in October ahead of the report is limiting upside market movement in nearby contracts, but the support in spring and summer contracts is growing.
With overall cow herd numbers lower over the last couple of years, cattle placement numbers are not as much a factor of how many cattle are placed throughout the year but when these cattle are moving into feed yards. The seasonality of this cycle is likely to have more of a shift in specific contract prices than the overall market structure itself. November feeders are $0.55 lower at $229.5, January feeders are $1.50 higher at $230.5 and March feeders are $2.08 higher at $233.45.
LEAN HOGS:
Follow-through pressure is seen in all lean hog futures trade Wednesday morning, although the overall tone of the market remains unchanged with prices maintaining the recent sideways trading pattern developed over the three weeks. Spot December contracts are leading the complex lower, but even with the price losses, it has been very difficult to draw additional selling activity, indicating that traders seem to be generally comfortable with current market ranges. Limited fundamental support ahead of the Thanksgiving holiday is also creating some lackluster direction across the entire lean hog futures complex. December lean hogs are $0.58 lower at $71.725, February lean hogs are $0.55 lower at $75.375 and April lean hogs are $0.35 lower at $81.425.
Hog prices are higher on the Daily Direct Morning Hog report, up $0.18 with a weighted average of $64.40, ranging from $59 to $70 on 2,675 head with a five-day rolling average of $65.83. Pork cutouts totaled 194.49 loads with 169.86 loads of pork cuts and 24.63 loads of trim. Pork cutout values are down $0.60 at $87.04.
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