Cash cattle trade is expected to remain subdued early Monday morning with show list distribution and inventory taking the main priority of the day. With the Thanksgiving holiday only days away, it is expected that both sides will get busy with needed sales sooner than later. Although there is the possibility that trade will be pushed off until Black Friday after Thanksgiving, it is expected that most of the needed business will be in the books by late Wednesday, meaning that bids and asking prices will likely develop earlier this week than typically seen. Futures trade is mixed with the general tone of the market week following pressure late last week. The inability to bring any sense of stability into the feeder cattle complex is creating some additional uncertainty about current price levels through the end of the month. The cattle on feed report is generally neutral as the strong increases over year-ago levels in both cattle placed and total cattle on feed is below market estimates, but showing increases none the less. This will once again put additional focus on the early direction in feeder cattle futures, which have been unable to find any sense of support over the last several days. With the abbreviated trading schedule this week, overall volume through the entire complex is likely to remain subdued, which may be what is needed in order to stimulate additional buyers to once again step back into the eroding market complex. Monday slaughter runs are expected at 118,000 head.
Early trade is expected to remain mixed to mostly lower across lean hog futures following Friday's cold storage report. The increased amount of pork available on the market points to the underlying continued supply level of market ready hogs as packers continue to run full throttle due to increased margin levels. Although cold storage report numbers are typically overlooked, the combination of increased pork building as well as continued concern of long-term activity with China may add to the volatility in the market through the shortened holiday week. Cash hog bids are expected to be steady to $1 per cwt lower with most bids steady to weak. Slaughter Monday is expected at 489,000 head.
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| 1) | Continued cash cattle market support through the end of last week is helping to push increased focus on the ability to keep the entire market current through the last quarter of the year with tighter supplies expected during early 2020. | 1) | Cattle placement and total on-feed numbers posted strong gains from year-ago levels. Although this is not a total shock, the growth, especially in feedlot placements may add to the already weak market structure. |
| 2) | Even though feeder cattle placement numbers grew significantly in October, the fact that actual placements were well below market estimates should help to solidify early-week support. | 2) | Strong triple-digit losses in beef cutout values Friday is adding to the underlying softness across the entire cattle futures complex. This may add even more momentum for early-week losses. |
| 3) | Strong pork cutout gains developed late last week, once again focusing on the ability to sustain underlying buyer support and focus on long-term movement of product through the end of the year. | 3) |
Continue pressure in cash hog values is developing, which is widening the gap between cash prices and wholesale pork values, allowing for even larger packer margins in a generally weak market structure.
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| 4) | Increased buying by China for next year was seen in last week's export sales report with purchases for 2020 continuing to build, which solidifies that the share of needed pork coming from the U.S. is starting to grow, and gives hope for additional purchases over the coming months. | 4) | Pork supplies continue to build in the latest cold storage report. This is causing some concerns that overall supplies are still outweighing overall domestic and export demand and may continue through the foreseeable future. |
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