Wednesday Midday Livestock Market Summary - Feeder Cattle Contracts Paying Close Attention to Corn Prices

 General Comments

The cattle contracts are soaking up this week's support, rallying modestly in the live cattle market and upwards of $1.00 higher in the feeder cattle market. Meanwhile in the lean hog market the contracts keep stair-stepping lower as pressure around resistance levels encourages the market to trade lower. December corn is down 11 1/4 cents per bushel and December soybean meal is down $6.00. The Dow Jones Industrial Average is down 678.49 points and NASDAQ is down 316.80 points.

LIVE CATTLE

The live cattle market is liking the support that is largely stemming from the rally in the feeder cattle market and obvious support from traders that are willing to step back into the market again. December live cattle are up $0.62 at $104.67, February live cattle are up $0.47 at $107.47 and April live cattle are up $0.57 at $111.22. Wednesday's usual cash cattle business didn't go as planned as the Fed Cattle Exchange experienced some technical difficulties and was unable to host their weekly sale. Around midmorning some cash cattle bids did start to lightly develop. There are some cattle bid on in Texas at $104 but asking prices are starkly higher at $108 in the South, and the North has yet to set their prices. Trade is more likely to see develop Thursday and Friday though there could be some mild developments throughout Wednesday afternoon.

Boxed beef prices are mixed: choice down $0.75 ($205.95) and select up $1.16 ($189.83) with a movement of 110 loads (65.52 loads of choice, 15.51 loads of select, 8.42 loads of trim and 20.71 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts are bound and determined to make a comeback as the market's successfully rallied three days in a row. Wednesday's biggest support is coming from the corn markets hard sell off as December corn falls $0.11 lower per bushel, and March corn is down $0.10 per bushel. November feeders are up $1.37 at $133.67, January feeders are up $1.30 at $129.75 and March feeders are up $1.17 at $129.22. If the market can keep this forward momentum, and see some progress made in the live cattle market - buyers could be somewhat more willing to look at feeder cattle and calves selling this fall.

LEAN HOGS

As the lean hog market scales lower; seeming at the time unwilling to surpass the market's current resistance planes, traders look at the cattle contracts will more interest and leave the hogs to fall lower. December lean hogs are down $1.37 at $66.27, February lean hogs are down $1.92 at $66.12 and April lean hogs are down $1.77 at $68.60. Pork cutouts aren't as hot Wednesday as they were earlier in the week, and with the cash markets lower midday prices, the market sits fully lower heading into Wednesday afternoon. As time passes and we begin to look to Thursday, the week's export report has a way of gravely affecting the pork market. Hog producers obviously hope for a strong report to keep packers vigorously processing and to help move front end supplies.

The projected lean hog index for 10/26/2020 is down $0.70 at $77.47 and the actual index for 10/23/2020 is down $0.37 at $78.17. Hog prices are lower on the National Direct Morning Hog Report, down $1.12 with a weighted average of $61.44, ranging from $58.00 to $63.50 on 5,110 head and a five-day rolling average of $60.62. Pork cutouts total 226.60 loads with 203.84 loads of pork cuts and 22.76 loads of trim. Pork cutouts values: down $0.01, $88.82.

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Wednesday Morning Livestock Market Summary - Packers May Become More Aggressive

 General Comments:

Cattle futures performed well Tuesday and have done so since the bearish Cattle on Feed report. The market was oversold and ripe for a retracement. Traders had overdone the market to the downside. Packers are still window dressing, waiting to see what feedlots will offer. Feedlot are not anxious to establish offers now that futures have risen over the past two days. Bids and offers should begin to be posted Wednesday but will likely be the usual few dollars apart. Packers may be loath to bid at even steady prices, but the rise of futures may require them to bend a bit. The concern for the market is the inability of futures to hold strong gains that were posted during the day closed around a dollar off their highs with the exception of front-month October, which finishes trading on Thursday. Boxed beef may not support higher prices, which may limit upside price potential.

Hog futures followed a similar pattern as cattle, closing about a dollar off the highs of the day. December was a different story, posting a price swing of $2.00 and finally closing 10 cents lower. Traders might be content with hog prices and might move futures into a sideways pattern for a short period of time. Packers stepped up to the plate Tuesday with higher bids, but once needs are filled, they will be less aggressive. The China news of lower imports next year is becoming old and tedious news. Traders want to focus on the here and now, and higher cash with lower cutouts keeps the market somewhat neutral.

	BULL SIDE		BEAR SIDE
1)	Feeder cattle have been leading the charge higher, providing some optimism in the market. Live cattle have digested the Cattle on Feed report and have moved to focusing on supply and demand.	1)	Cattle futures have corrected from an oversold market and now may have more difficulty finding new buying interest. Higher cattle numbers are still on traders' minds.
2)	Higher futures may provide more confidence for feedlots to hold for steady-to-higher prices this week. Lower boxed beef is improving demand.	2)	If packers are unwilling to accomplish business at even steady bids, futures may struggle to move much higher. Higher weights and slowing food service demand is not a good combination.
3)	Hogs futures could not hold the highs of the day, but contracts closed higher over the past two days. Traders have taken advantage of the recent lows to get on board to ride the market higher.	3)	The inability of hog futures to hold their highs Tuesday may indicate traders are willing to sell more aggressively at higher prices. Futures achieved a 50% price retracement, which may be difficult to overcome.
4)	Higher cash Tuesday should set the tone for Wednesday with prices expected to be no worse than steady. This will give traders greater confidence to hold long positions in anticipation of a return to the highs.	4)	Lower cutouts may have buyers thinking twice about increasing cash bids Wednesday after their aggressive showing Tuesday.

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Tuesday Closing Livestock Market Summary - Contracts Delight in the Board's Support

Tuesday's trade wasn't a whirlwind by any means, but the day's slow and methodical trade was comfortable and allowed all three livestock markets to close higher. Following last week's bearish trade, a steady market willing to rebuild some positioning is being well received. Hog prices closed higher on the National Direct Afternoon Hog Report, up $2.05 with a weighted average $62.56 on 11,535 head. December corn is down 1 3/4 cents per bushel and December soybean meal is down $5.60. The Dow Jones Industrial Average is down 222.19 points and NASDAQ is up 72.41 points.

LIVE CATTLE:

The live cattle market took Tuesday and mustered up the most support. With cash cattle prices still at a mere standstill and boxed beef prices closing mixed, the market's most significant business for Tuesday was the futures higher close. December live cattle closed $0.65 higher at $104.05, February live cattle closed $0.62 higher at $107.02 and April live cattle closed $1.22 higher at $110.72. Tuesday's slaughter is estimated at 117,000 head, 4,000 head less than a week ago and 4,000 head more than a year ago. Monday's cattle slaughter was revised to 115,000 head.

Boxed beef prices closed mixed: choice down $1.13 ($206.70) and select up $0.18 ($188.67) with a movement of 175 loads (104.81 loads of choice, 25.52 loads of select, 17.21 loads of trim and 27.60 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Steady. It wouldn't be surprising to see cash cattle trade start to develop sometime after Wednesday's Fed Cattle Exchange. If the board will support higher prices, feeders will work to get cattle sold this week for at least steady prices.

FEEDER CATTLE:

Feeder cattle contracts closed fully higher, though they didn't close as high as what the day had traded for earlier. November feeders closed $1.72 higher at $132.30, January feeders closed $1.65 higher at $128.42 and March feeders closed $1.60 higher at $128.05. Helping spark some support for the feeder cattle contracts is simply traders' willingness to jump back into the market and actively trade, along with the corn market's slight regression. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to a week ago, steer and heifers traded mostly $3.00 to $5.00 lower on a limited offering. The area was swept with a cold front that made shipping cattle difficult for this week's sale. The CME feeder cattle index for Oct. 26: down $0.06, $133.64.

LEAN HOGS:

Other than the spot December contract, the lean hog market closed cautiously higher. Helping aid the market along was the industry's stronger cash hog trade, which was over $2.00 higher on more than $11,000 head. December lean hogs closed $0.10 lower at $67.65, February lean hogs closed $0.40 higher at $68.05 and April lean hogs closed $0.30 higher at $70.37.

Pork cutouts total 444.39 loads with 399.34 loads of pork cuts and 45.05 loads of trim. Pork cutout values: down $3.03, $88.83. Tuesday's slaughter is estimated at 492,000 head, 4,000 head more than a week ago and steady with a year ago. Monday's hog slaughter was revised to 487,000 head. The CME lean hog index for Oct. 23: down $0.37, $78.17.

WEDNESDAY'S CASH HOG CALL: Steady to somewhat higher. The cash hog market has been pulling some attention and packers are willing to up their bids and get hogs committed. Following two days of stronger trade, Wednesday's business could support higher prices if the board cooperates, as packers are vigorous about processing right now.

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Tuesday Midday Livestock Market Summary - Cattle Contracts Trading Fully Higher

The livestock complex has repeated the benefits from the support surfacing throughout Tuesday morning's trade. Cattle contracts have steadily traded higher all throughout the day, but the lean hog complex has been a bit touchy -- trading higher and lower throughout the morning. December corn is down 2 1/4 cents per bushel and December soybean meal is down $3.80. The Dow Jones Industrial Average is down 84.96 points and NASDAQ is up 64.04 points.

LIVE CATTLE

With live cattle prices faring better than what was expected, feeders are hopeful to push cash cattle trade to the end of the week and bat for at least steady prices. December live cattle are up $0.30 at $103.70, February live cattle are up $0.15 at $106.55 and April live cattle are up $0.87 at $110.37. The mixed trade in boxed beef prices will still make getting much of a premium off last week's trade difficult as packers are seeing lower retail prices -- but steady trade isn't out of the question. Bids and asking prices are still elusive and it's very likely that this week's trade won't develop until after Wednesday's online auction.

Boxed beef prices are mixed: choice down $0.29 ($207.54) and select up $0.55 ($189.04) with a movement of 119 loads (64.12 loads of choice, 20.62 loads of select, 13.23 loads of trim and 21.18 loads of ground beef).

FEEDER CATTLE

The feeder cattle market took the brunt of last week's downward spiral but come Tuesday the market is taking full advantage of the building support. November feeder cattle are up $2.40 at $132.87, January feeder cattle are up $2.35 at $129.12 and March feeders are up $2.25 at $128.67. Helping support the market is the slight regression in the nearby corn contracts and traders being willing to step back into the market and leave their sideline position. Feeder cattle and calves sold mostly lower throughout the countryside Monday afternoon, but it was interesting to see sale receipts lower than the previous week. As cow-calf producers saw a weaker market they revaluated their marketing strategy, and some decided to wait a little longer for a better market.

LEAN HOGS

Finding support has been touch and go for the lean hog market as cattle contracts seem to be drawing more trader interest. As the lean hog market starts to face some resistance, it makes sense that traders would be more prone to looking at the cattle contracts as they've scaled considerably lower here recently. December lean hogs are steady at $67.75, February lean hogs are up $0.22 at $67.87 and April lean hogs are down $0.10 at $69.97. Following Monday's weaker pork cutout close, Tuesday's midday cutout looks promising for a stronger close, but the market has been facing some regression in cutout values as of late.

The projected lean hog index for 10/23/2020 is down $0.37 at $78.17 and the actual index for 10/22/2020 is down $0.06 at $78.54. Hog prices are higher on the National Direct Morning Hog Report, up $0.81 with a weighted average of $61.32, ranging from $56.00 to $61.32 on 4,276 head and a five day rolling average of $60.08. Pork cutouts total 198.41 loads with 179.42 loads of pork cuts and 18.99 load of trim. Pork cut out values: up $3.03, $94.89.

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