The cash cattle trade through the day should be a typical yawn-fest with bids and asking prices poorly defined. This week's total kill is expected to come close to 640,000 head. Live and feeder futures seem geared to open on a mixed basis, reflecting early-week apathy and uncertainty concerning preturkey beef demand and price potential.
Given the way hog buyers continued to dig the cash hole on Monday, we assume Tuesday's country trade will remain on the defensive, opening weak to $1 lower. Early estimates put weekly hog slaughter at 2.6 million head, if not a bit larger. Lean futures should open moderately higher, supported by spillover buying, short-covering and the premium status of the cash index.
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New showlists distributed in cattle-feeding country look generally smaller with only Kansas showing more ready steers and heifers.
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Bearish sentiments on 2019 beef supplies appeared to be weighing on the minds of many traders. The index roll officially started midweek and will be carrying on into this week.
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Beef cutouts open with a decent show of strength on Monday with early-week box movement described as "moderate to fairly good."
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Despite Monday's carcass improvement, beef loins, chucks and rounds seem vulnerable over the short term. Further weakening is expected into late November or early December.
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The pork carcass value opens moderately higher Monday, supported by ribs, picnics and processing items.
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Monday's momentary surge in lean hog futures could easily be little more than a one trick pony. The still enormous discount in December compared to the cash market is reflective of trader expectations of lower cash markets as the industry works through the record hog supplies late this year.
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Triple-digit gains scored in lean hog futures on Monday may be the trade's first recognition that the strength of the cash index has been underappreciated.
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A weakening belly over the next few weeks will allow the traditional price decline on the cutout to progress. Weekly declines on the cutout could be relatively minor, maybe less than seasonal, but the upward price risk continues to fade.
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CATTLE:CATTLE: (Agweek) -- The cattle market has held up surprisingly well this year in the face of big supplies and folks in cattle country remain optimistic for fourth quarter. In fact, fed cattle prices have beaten analyst projections.
"They thought we were going to go sub-one dollar like we did a year ago in October now, but we stayed in there $108 or $110 and that's a good thing and that keeps people current," Quinn, S.D., cattle producer Myron Williams says.
Yearling prices also have been running above 2017.
Kent Fjeldheim is a cattle producer and works at Herreid (S.D.) Livestock Auction. He says yearling prices have been surprisingly strong and are at a level cattle producers are making some money. "A flat nine weight steer, you know, pushing up to $158 to $160 and the eight weights, you know, kind of in the $165 to $168 range and the 10 weights are sure bringing in the low to mid-$150 range," he says.
Calf prices are generally steady with 2017, but there are some higher quality calves running even a bit stronger.
"In some cases on the yearlings, $10 higher, $10 a hundred higher. On the calves maybe $5," according to Keith Eichler with Eichler Livestock Marketing of Aberdeen, S.D.
One of the fundamental factors holding up the cattle market has been strong demand, which has been reflected in higher boxed beef prices. "People are spending money," Williams says. "It's hard to believe with the amount of issues we've had with weather, I mean hurricanes, flooding and yet the boxes stay moving and that's a good thing."
Exports have also been running at record levels. "Our exports are up good, Eichler says. "I'm amazed at that and I don't think people understand that they're selling a lot of prime meat and high choice meat to export."
The other plus is producers are moving through the largest cattle numbers. Williams even questions if the big supply that was predicted and projected in USDA's Cattle on Feed reports ever materialized. "You know, we've been still waiting for this big wall of cattle and somehow we've stayed current," he says.
Market experts also say more cows are being slaughtered, and it isn't being forced by drought conditions like it was in 2017.
"This summer, I mean, you'd see 500, 600, 700, up to 1,000 head coming to the sale on a weekly basis, at each sale barn in some cases," Eichler says.
That combined with softer heifer prices is one indication.
HOGS: (AgriPulse) -- The goal is for President Donald Trump and his Chinese counterpart, Xi Jinping, to agree on a preliminary "framework" for ending the countries' trade hostilities when they meet, as scheduled, later this month in Argentina at the G20 summit, U.S. Ambassador to China Terry Branstad told Agri-Pulse Tuesday.
"We're trying to be prepared for the G20 meeting, and hopefully out of that can come the beginnings of a resolution for the trade issues," Branstad said after a meeting Tuesday with Agriculture Secretary Sonny Perdue at USDA headquarters. "My hope is that we can develop a framework that can lead to an agreement."
Before talking to Perdue, Branstad met with Trump, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to discuss plans for negotiating with China, the ambassador and former Iowa governor said.
"Obviously, we're going to try to do all we can to try to get something resolved on this," he said. "It's critically important."
China, in retaliation to U.S. tariffs, has hit just about every U.S. farm commodity with stiff import taxes. They include a 25 percent tariff on U.S. soybeans which has virtually halted U.S. exports of the oilseed. The U.S. first hit China with steel and aluminum tariffs and then began levying more tariffs to punish the country for intellectual property theft.
Perdue "expressed optimism that President Trump's approach to trade will lead to a resolution of the dispute with China," a USDA spokesman told Agri-Pulse after the meeting with Branstad.
Citing the trade war with China, the USDA Tuesday cut its forecast for U.S. soybean exports for the current marketing year by 160 million bushels, to 1.9 billion bushels.
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