Wednesday Midday Livestock Market Summary - Stronger Tones Lead Complex Higher Into Afternoon

GENERAL COMMENTS:

The livestock complex is heading into Wednesday's afternoon fully higher as the market welcomes traders' interest and hopes that follow-through fundamental support reaches the markets Wednesday afternoon. After closing sharply lower Tuesday afternoon, the lean hog complex is back to rallying in a hasty way as traders seem quick to want to recover lost position. December corn is up 3 cents per bushel and December soybean meal is steady. The Dow Jones Industrial Average is down 172.16 points.

LIVE CATTLE:

The live cattle market hasn't seen much business shake through its market has of yet as traders are mildly supporting the contracts, seeming to wait to see how the cash cattle market trades. Feedlots know that packers are hungry for cattle and have thus held strong in waiting the week out for potentially higher prices. A lone bid of $234 stands in Nebraska, but at this point, feedlots are passing it by. Asking prices are noted in the South at $145 but are still not established in the North. October live cattle are up $0.82 at $145.02, December live cattle are up $0.67 at $148.17 and February live cattle are up $0.70 at $151.95.

The Fed Cattle Exchange Auction held Wednesday reported 8 lots (6 lots in Texas and 1 lot each in Nebraska and Kansas), totaling 1,557 head of cattle. Opening prices were at $141 to $142, high bids had a range of $141.50 to $144.25, reserve prices were $143 to $145. Only 1 lot sold, 201 head in Nebraska at $144.25.

Boxed beef prices are lower: choice down $0.54 ($247.50) and select down $1.84 ($220.07) with a movement of 108 loads (72.61 loads of choice, 19.09 loads of select, 7.22 loads of trim and 9.14 loads of ground beef).

FEEDER CATTLE:

Feeder cattle are aiming to close higher and even with the corn complex pushing $0.03 to $0.04 rally heading into noon hour, the market seems confident in its upward quest. October feeders are up $1.55 at $176.25, November feeders are up $1.72 at $176.92 and January feeders are up $1.35 at $177.42. It's helping that the live cattle market is trading higher too, but the biggest supportive gesture is stemming from the likelihood that feedlots will see higher prices again this week. If the cash cattle market does indeed trade higher and corn doesn't pose much more of treat, then a stronger close isn't out of the picture for the feeder cattle market.

LEAN HOGS:

The lean hog market has posted a stronger trade after the market was blindsided by traders Tuesday afternoon and closed sharply lower. The trajectory of the market remains shaky as, on one hand, hogs possess some opportunity to trade higher given that the market is far from any resistance pressure and the sheer volume of hogs needed to be marketed its overbearing. But, at the same time, with demand being questionable both domestically and internationally, packers are quick to react to protect their margins, which adds a shakable level of uncertainty and volatility to the complex. December lean hogs are up $2.12 at $76.55, February lean hogs are up $1.52 at $78.80 and April lean hogs are up $1.15 at $84.45.

The projected lean hog index is delayed from the source. Hog prices are higher on the Daily Direct Morning Hog Report, up $4.11 with a weighted average of $89.92, ranging from $83.00 to $98.00 on 7,852 head and a five-day rolling average of $87.20. Pork cutouts total 176.61 loads with 150.70 loads of pork cuts and 25.91 loads of trim. Pork cutout values: up $2.45, $100.74.

Wednesday Morning Livestock Market Update - Hog Futures May Struggle to Find Buyers

GENERAL COMMENTS:

The financial markets had a banner day with the stock market closing 825 points higher Tuesday. However, that was not enough to maintain early gains in livestock futures. Boxed beef certainly was positive with choice up $2.10 and select up $0.60. Cash cattle have not yet traded, leaving uncertainty over cash potential. The general idea is that cash will trade higher as slaughter pace continues to run strong and packers need to purchase for the week and to try and keep ahead of the market by continuing to purchase some for differed delivery. Feeder cattle reacted negatively to a supported grain market.

Hog futures had the rug pulled out from under them. Heavy selling pushed futures below recent support, moving December futures to the lowest close since Dec. 9. Recent strength seemed to provide more confidence the market would regain some of its large losses experienced earlier, but the path of least resistance was lower, propelled by stops triggered at the lows of last week. This may make it difficult for traders to buy into the market Wednesday. Packers were very aggressive in the cash market with the National Direct Afternoon Hog report showing a gain of $10.17. However, that strength was not supported by cutouts which lost $1.64.

	BULL SIDE		BEAR SIDE
1)	Feedlots seem determined to receive higher cash this week and may hold until they get it.	1)	Cattle could not hold their highs Tuesday even though there is a strong possibility of higher cash trade this week.
2)	Consumer demand seems to be holding well with boxed beef higher in both categories so far this week. Slaughter pace remains strong.	2)	Feeder cattle futures may remain the anchor of the cattle complex as the trend is still down and there is limited interest from traders to establish solid long positions.
3)	Although quite a bit higher, there is chart gap in all hog contracts that may be filed at some point.	3)	The rampant selling of hog futures Tuesday may be difficult to overcome in the near term. Technical damage has been done, leaving traders unwilling to commit to buying the market for the long term.
4)	Stronger slaughter pace with hog weights being about 3 pounds less than a year ago means more hogs will need to be slaughtered to make up the difference. This suggests market-ready hogs are current.	4)	Pork cutouts continue to struggle with plentiful supplies, keeping demand satisfied.

Tuesday Closing Livestock Market Update - Hogs Break Beneath Support

GENERAL COMMENTS:

The livestock complex endured a bit of a setback through Tuesday's market as the contracts seemed to distance themselves from the rest of the outside markets, which performed exceptionally well. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $10.17 with a weighted average of $92.77 on 20,744 head. December corn is up 2 1/4 cents per bushel and December soybean meal is down $3.80. The Dow Jones Industrial Average is up 825.43 points.

LIVE CATTLE:

The live cattle complex started the day off stronger, but as time ticket by, the market grew less and less appealing to traders and consequently closed lower, even though the larger commodity market had a stellar day. The nearby live cattle contracts weren't able to cling to the market's recent uptick, but the deferred contracts managed to still close mostly higher. October live cattle closed $0.12 lower at $144.20, December live cattle closed $0.52 lower at $147.50 and February live cattle closed $0.30 lower at $151.25. The day's lower tone isn't something that gravely concerns me as it seems like a mild pullback after closing stronger on Monday. Now, if the market closed like the lean hog complex did, taking out its recently developed support plane, then I'd be singing a different tune. But given that feedlots are eager to trade cattle and have their eyes set on higher prices, thanks to the support of stronger boxed beef prices, I tend to think the market could be straightening out. The cash cattle market didn't see much develop throughout the day as feedlots are determined to get cattle sold for more money this week. 

Tuesday's slaughter is estimated at 128,000 head, steady with a week ago and 6,000 head more than a year ago.

Boxed beef prices closed higher: choice up $2.10 ($248.04) and select up $0.60 ($221.91) with a movement of 99 loads (57.54 loads of choice, 19.75 loads of select, 3.12 loads of trim and 18.60 loads of ground beef). The choice/select spread sits at $26.13.

WEDNESDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. There's no denying that packers are sweating over margins, which is something that they haven't had to do over the past two years, but given the uptick in boxed beef prices and how current showlists are, I think feedlots stand a strong chance at getting cattle sold higher this week.

FEEDER CATTLE:

The feeder cattle market didn't like the sight of slightly higher corn prices and traded bitterly throughout most of Tuesday's market. The complex opened stronger, but as time passed, the market grew hesitant as corn posted a mild advance, and with the live cattle contracts lending no support, the market had little ground to stand on. Feeder cattle demand throughout the countryside has been hit or miss as buyers as limited with options given that there isn't much grazing to be had this fall. October feeders closed $0.87 lower at $174.65, November feeders closed $0.85 lower at $175.20 and January feeders closed $0.95 lower at $176.07. At Imperial Auction Market in Imperial, Nebraska, compared to last week, steers sold $2.00 to $8.00 higher and heifers traded anywhere from $2.00 to $20.00 stronger. Feeder cattle supply over 600 pounds was 22%. The CME Feeder Cattle Index for Oct. 3: up $0.23, $175.67.

LEAN HOGS:

Sometimes finding a rhyme or reason as to why something happens in a market feels like an act of God, that was a perfect summary for the lean hog complex Tuesday. Were cash prices supportive? Yes. Was it expected that pork cutout values would close lower given that Monday's big push largely stemmed from a pump in belly prices? Yes. And did the market start the day off strong? Yes, it actually ran to $79.15 in the December contract before submitting to pressure and closing beneath the recently develop support plane. December lean hogs closed $3.30 lower at $74.42, February lean hogs closed $2.82 lower at $77.27 and April lean hogs closed $2.37 lower at $83.30. Despite the odd developments throughout the futures market, it was rather impressive to see the volume of pork cuts that sold and to see the cash market trade $10.17 higher on over 20,000 head. Pork cutouts totaled 354.25 loads with 310.38 loads of pork cuts and 43.87 loads of trim. Pork cutout values: down $1.64, $98.29. Tuesday's slaughter is estimated at 487,000 head, 4,000 head more than a week ago and 8,000 head more than a year ago. Monday's hog slaughter was revised to 465,000 head. The CME Lean Hog Index for Sept. 30: down $0.58, $94.33.

­­­­­WEDNESDAY'S CASH HOG CALL: Steady. Given that the futures market faced stiff pressure, packers could step back from the cash market to assess things.

Tuesday Midday Livestock Market Update - Higher Corn Puts a Kibosh to Hopes of Higher Trade for Feeders

GENERAL COMMENTS:

As the livestock complex nears the noon hour, the corn market's mild gain has rocked the feeder cattle complex back on its heels. The lean hog complex is clinging to its market's strong fundamentals and hopes that stronger tones can again find their way into the contracts before closing time. December corn is up 4 cents per bushel and December soybean meal is down $2.20. The Dow Jones Industrial Average is up 815.46 points.

LIVE CATTLE:

The nearby live cattle contracts are struggling, but the deferred contracts are still trading higher into Tuesday's afternoon as the market clings to its bullish fundamentals. October live cattle are down $0.07 at $144.25, December live cattle are down $0.57 at $147.45 and February live cattle are down $0.17 at $151.37. With boxed beef prices closing higher Monday afternoon, and midday prices higher on Tuesday, could it be that the market's seen its seasonal low or will tough economic times drive prices lower in the weeks to come? Regardless, feedlots are pleased to see the heightened interest in beef prices as it means that packers will likely continue to run chain speeds aggressively and need to stay active in the cash market. The cash cattle market hasn't seen any interest at this point, though packers could grow more curious as the day goes on. Asking prices in the South are noted at $145 but are unknown in the North.

Boxed beef prices are higher: choice up $2.88 ($248.82) and select up $0.15 ($221.46) with a movement of 52 loads (28.86 loads of choice, 10.17 loads of select, 3.12 loads of trim and 9.62 loads of ground beef).

FEEDER CATTLE:

The feeder cattle market started the day out stronger but as the corn complex grows stronger too, it's now heading into Tuesday's afternoon lower. October feeders are down $0.72 at $174.80, November feeders are down $0.62 at $175.42 and January feeders are down $0.55 at $176.47. What's encouraging at this point, however, is that, even though the feeder cattle market is trading lower, it's not pressuring Monday's lower trading range.

LEAN HOGS:

The lean hog complex was eager to start the day off stronger, but as the day has progressed, its market has grown hesitant and is now heading into Tuesday's afternoon fully lower. October lean hogs are down $1.15 at $87.62, December lean hogs are down $2.17 at $75.55 and February lean hogs are down $1.32 at $78.77. Even though the futures market may be retracting, the fundamental side of the market looks rather supportive as midday cash prices and early pork cutout values are higher. The $14.62 gain in bellies Monday afternoon helped pull pork cutout values higher, so, heading into Tuesday's afternoon, seeking the afternoon cutout data will be intriguing as everyone knows that bellies are every volatile.

The projected lean hog index is delayed from the source. Hog prices are higher on the Daily Direct Morning Hog Report, up $3.14 with a weighted average of $85.81, ranging from $80.00 to $95.50 on 4,553 head and a five-day rolling average of $86.55. Pork cutouts total 196.98 loads with 173.83 loads of pork cuts and 23.15 loads of trim. Pork cutout values: up $0.05, $99.98.