GENERAL COMMENTS:
Live cattle futures traders took the deferred 2021 contracts higher by the end of Friday's session in anticipation of the monthly Cattle On Feed report, which did indeed come in with neutral-to-bullish numbers: 1% more animals on feed than a year ago. Lean hog futures were also higher through Friday afternoon's trade with stiff enough gains to erase most of the week's previous volatile losses. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.33 with a weighted average of $58.73 on 4,961 head. December corn closed up 3/4 cents per bushel and December soybean meal closed up $1 per ton. The Dow Jones Industrial Average is down 219.75 points and NASDAQ is down 78.99 points.
From Friday to Friday, livestock futures scored the following changes: December live cattle off $1.82, February live cattle off $1.57, January feeder cattle off $3.28, March feeder cattle off $2.78, December lean hogs off $0.78, February lean hogs up $0.77.
LIVE CATTLE:
Live cattle futures traders will come in Monday morning generally pleased with the futures buying activity they undertook Friday afternoon in anticipation of the November Cattle on Feed report. The U.S. cattle inventory has been running at record-large numbers, and at 12.0 million head on Nov. 1, that trend continues. The number was only 1% higher than the year-ago figure and at the low end of pre-report estimates. October placements at 2.19 million head were 11% less than last year's huge October figure, and October marketings at 1.87 million head were slightly below last October. From a pure numbers perspective, the fed cattle market should feel well supplied, but given that many of the cattle currently on feed came in at relatively low weights due to drought stress, the outlook for availability in the next three to six months might require some adjustment. At Friday's close, the December contract was down $0.15 at $108.10, the February contract closed up $0.125 at $110.65, and the April contract closed up $0.25 at $114.45. Asking prices for cattle left on showlists Friday afternoon are around $110 plus in the South and $174 plus in the North, steady with last week.
Friday's slaughter was seen at 115,000 head -- 3,000 fewer than last week and 1,000 fewer than a year ago. Add 72,000 head from the expected Saturday slaughter for a weekly figure of 665,000 head, which is 12,000 more than last week but 3,000 fewer than the comparable week last year.
Boxed beef prices were higher: choice up $0.65 ($238.35) and select up $1.09 ($214.98).
MONDAY'S CASH CATTLE CALL: Steady. Although Monday's activity is likely to be limited to the collection of showlists, seasonal expectations could keep asking prices firm.
FEEDER CATTLE:
Feeder cattle futures couldn't shake the steeply lower trend that has taken over its charts since hitting last week's high. The January contract closed Friday down $0.95 at $134.60, the March contract was down $0.575 at $134.375, and the April contract closed down $0.40 at $136.175. However, this hasn't seemed to affect the moods of order buyers out in the country. Burwell, Nebraska, had a big sale Friday (1,850 head of all feeder cattle) that experienced good demand and resulted in 600 lb steers selling $3 higher ($152.62) and 500 lb heifers selling $6 higher ($153.10) than their values from the previous sale two weeks ago. The November feeder cattle futures contract settled Friday at $136.75. The CME Feeder Index for 11/18 came to $137.51 per cwt and has been holding steady above $137 all week.
LEAN HOGS:
Friday saw higher daily trading volume than in most recent futures trading sessions, and once that activity showed up, it helped the market recover and pull deferred contracts into small weekly gains. For the day, the December contract closed up $0.425 at $64.125, the February contract closed up $2.30 at $65.35, and the April contract closed up $2.00 at $68.225.
Through most of the week, the spread between hogs and pork had been widening in packers' favor, with a series of lower hog bids and generally stronger cutout values. But on Friday that trend finally halted, with some mild gains in purchased hog prices (up $0.33 to a $58.73 weighted average). Pork cutout values: down $1.05, $78.17. Hams have had the most volatility this week, but butt prices down $6.32 Friday also contributed to the carcass weakness. Pork cutouts total 391.36 loads with 342.18 loads of pork cuts and 49.19 loads of trim. Friday's slaughter was seen at 485,000 head -- 8,000 more than a week ago and 3,000 fewer than a year ago. Saturday is expected to be a big day, with 277,000 head slaughtered, bringing the weekly figure to 2,711,000 -- 28,000 more than last week but 56,000 fewer than the comparable pre-Thanksgiving week last year. The CME lean hog index for 11/18: down $0.55 at $68.77, and the DTN projected CME lean hog index for 11/19: down $0.63 at $68.14.
MONDAY'S CASH HOG CALL: Higher. Losses have been overdone in hog prices and some recovery may be expected.
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