Cash cattle prices last week increased 40 cents per cwt from the previous week with an average price of $110.13 per cwt. This underlying fundamental support may continue to develop through the end of the month, although no significant cash trade is expected to develop over the next couple of days. With Friday landing in November, it is uncertain just how interested packers will be to get weekly cash cattle trades on the books before the calendar changes. This is likely to be a company-by-company decision, and could determine how aggressive packers get about sourcing cattle during the last two days of the month. Asking prices are still undeveloped, as are bids, but more interest is expected as the week continues. The underlying tone of live cattle futures continues firm with additional strong long-term gains developing Monday, setting fall highs as December contracts closed at $116.60 per cwt. The slow, but steady gains in live cattle have done well for the complex and continue to build firm, underlying support through the market. Tuesday seems to be the day when a market will quickly change directions, if one is seen, creating some uncertainty about continued market support even though the underlying tone of the complex remains strong. A light to moderate price correction would not be shocking given the continued upward motion seen in the complex since early September. Tuesday slaughter runs are expected at 117,000 head.
Firm, early week support slowly trickled into lean hog futures Monday. A phase 1 trade deal appears to be on track for signatures in November, but a lot of questions remain on what this will mean for U.S. pork sales to China. The fact that December lean hog futures have fallen nearly $7 per cwt since October trade talks and the last indication of active export sales to China indicates the entire market needs more information and direct results before they are truly convinced this phase of a trade deal will significantly help pork prices. There has been very little mention of pork during these negotiations and that is concerning to the complex, especially following China's announcement Monday that they will end the ban on U.S. chicken imports. Large hog supplies continue to burden the market, eroding cash and wholesale pork support through late October; this is likely to remain a major issue the rest of the year. Cash hog values are expected to be steady to $1 per cwt lower, with most bids expected $1 lower. Expected slaughter Tuesday is at 490,000 head.
| BULL SIDE | BEAR SIDE | ||
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Live cattle futures continue to march steadily higher, with December futures holding well above $116 per cwt. This continued strength accounts for a generally unchecked rally of $17.43 since early September.
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Weekly showlists continue generally strong, with increases in all areas except Kansas. Despite moving past seasonal peak levels seen over the last month, current showlists are running nearly 20,000 head above year ago levels.
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Firm cash market gains developed last week, continuing the upward rally to a six-week stretch. Given the support in beef values and futures trade early in the week, feedlot managers appear intent on continuing higher prices for a seventh consecutive week.
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Feeder cattle futures remain stuck in a sideways pattern, with limited underlying support despite recent gains in live cattle trade. The inability to break through October highs over the next week may continue to define a moderate sideways trend through November.
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Firm support in lean hog futures moved prices away from three-week lows. This may help solidify additional buyer support as traders look for positive long-term strength over the near future.
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The amount of market-ready hogs coming to market continues to burden the entire system. This is limiting buyer support, leaving prices hovering near the bottom end of short-term trading ranges.
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Strong summer premiums continue to hold, currently near $30 per cwt above December price levels. Although seasonal support remains evident, the focus on better export trade over the next several months is still keeping traders optimistic.
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Cash hog prices continue to erode lower, as packers remain flooded with available hogs and, following the latest market downturn in futures prices over the last three weeks, are intent on protecting plant margins, if possible, through the end of the month.
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| #completeherdhealth |
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