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Export Sales Lower This Week

CATTLE

The technical action remains very bullish and the export news continues to provide underlying support. The large premium of futures to the cash market could be a factor to limit the buying support unless the beef market begins to help rationalize the big premium. December cattle closed sharply higher on the session yesterday and the buying pushed the market up to the highest level since September 14th. Cash live cattle are holding firm against last week. The 5-day, 5-area weighted average price as of Thursday was 122.82 versus 122.65 a week ago.  The USDA boxed beef cutout was down 30 cents at mid-session yesterday and closed $1.32 lower at $285.30 and the lowest the cutout had been since August 2. The market remains at a stiff premium to the cash market which may limit buying on a further strong advance.

US beef export sales for the week ending September 30 came in at 15,633 tonnes and the lowest since September 9. Cumulative sales for 2021 have reached 896,600 tonnes and the highest on record. The largest buyer this week was China at 6,014 tonnes, followed by Japan at 3,210 and South Korea at 2,570. South Korea has the most commitments for 2021 at 248,100 tonnes, followed by Japan at 229,400 and China at 142,100. The USDA estimated cattle slaughter came in at 120,000 head yesterday. This brings the total for the week so far to 483,000 head, up from 473,000 last week and 472,000 a year ago.

LEAN HOGS

The turn down in the cash market is a bearish development but the huge discount of futures to the cash market is a factor which may limit the selling pressures. The export news remains bearish, and the seasonal advance in slaughter supply could cause a further decline in cash markets in the weeks just ahead. The CME Lean Hog Index as of October 5 was 93.51 down from 94.11 the previous session but up from 92.92 a week before. The USDA pork cutout, released after the close yesterday, came in at $110.88, down 11 cents from Wednesday and down from $115.24 the previous week. December hogs closed higher on the session yesterday but well off of the high. The market opened sharply higher on the day and experienced choppy and two-sided trade.

US pork export sales for the week ending September 30 came in at 22,108 tonnes and the lowest since August 12. Mexico was the largest buyer this week at 16,013 tonnes. Cumulative sales for 2021 have reached 1.568 million tonnes and the second highest on record. Mexico has the most commitments for 2021 at 545,609 tonnes, followed by China at 376,080. A year ago, China’s commitments were 649,498 tonnes.  The USDA estimated hog slaughter came in at 478,000 head yesterday. This brings the total for the week to 1.896 million head, up from 1.886 million last week but down from 1.953 million a year ago. China’s national average spot pig prices for the month are down 23% and down 69.9% year to date.

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