Market News

Cattle futures close sharply higher

Feedlot country remained at a standstill on Wednesday afternoon. Buyers and sellers maybe drifting further apart. Understandably feedlot attitudes have been cheered by another round of sharply higher futures. On the other hand, packer caution may be intensifying as box beef prices continue to drift lower. The kill was estimated at 111,000 head, even with last week, but 1,000 below last year.

Boxed beef cutout values were weak to lower on moderate demand and heavy offerings. Choice beef was down .59 at 203.58, and select was down 1.17 at 197.70.

Chicago Mercantile Exchange live cattle contracts settled 115 to 422 points higher on Wednesday. October futures led the charge higher and at one point traded limit higher. Although the rest of the complex was well below the daily trading limit of $4.50 per hundredweight, the gains were just as impressive given the lack of support seen in the market the last month. October was up 4.22 at 129.35, and December was 2.92 higher at 136.15.

Feeder cattle ended trade 242 to 367 points higher on the sharp gains in the live cattle trade driving buyers back into feeder futures, although very little significant movement was seen after the early trade. Futures didn’t even come close to the expanded trading limits with upward movement in most contracts from $3.00 to 4.00 rallies before closing off the day’s highs. It is important to stress, that a sustained move higher may be more important than the size of the one day move, as renewed buyer confidence could help to establish a significant trend shift through early October. October settled 2.42 higher at 184.95, and November was up 3.20 at 181.22.

Feeder cattle receipts at the Philip Livestock Auction at Philip, South Dakota totaled 5736 head on Tuesday, Compared to last week feeder steers weighing 900 to 950 pounds were steady, other classes were not well compared. Feeder heifers weighing 850 to 1,000 pounds trended 8.00 to 10.00 lower, there was not a good comparison on other classes. Feeder steers medium and large 1 weighing 578 pounds averaged 210.10 per hundredweight. 565 pound heifers brought 180.09.

Lean hogs settled mostly 20 to 100 points lower with only October higher. Activity in the lean futures remained extremely light with mixed prices holding as either side was unwilling to move from earlier positions. October showed gains based on the firming support in cash and pork values. Other nearby contracts gained very little interest, as most buyers who have not already committed to the lean hog market are closely attuned to the shift higher in cattle prices through the last couple of days.

Barrows and gilts in the Iowa/Minnesota direct trade closed .88 higher at 71.50 weighted average on a carcass basis, the West was 1.21 higher at 71.45, and nationally the market was .46 higher at 70.78. Missouri direct base carcass meat price was steady at 64.00. Midwest hogs closed steady to 1.00 higher from 46.00 to 60.00.

The pork carcass cutout value was .10 lower at 86.93 FOB plant.

The spread between wholesale beef and pork has narrowed significantly over the last 30 days, and pork seems unlikely to gain more ground through the fourth quarter.

The kill was estimated by USDA at 433,000 head, 4,000 greater than last week and 7,000 more than last year.