General Comments:
Moderate cash cattle trade through the end of last week helped to support the idea that further cash market gains may continue to develop over the next couple of weeks. Live cattle trade remained steady to $1 per cwt higher with late week trade moving closer to the $107 per cwt level ($1 higher). The biggest market momentum was seen in dressed trade with prices mostly $5 to $7 per cwt higher, $165 to $167 per cwt, although the entire range was $160 to $167 per cwt. The momentum in futures trade and boxed beef activity is expected to spark renewed interest in cash trade, although limited cash market activity is expected Monday. Most of the focus is likely to be placed on showlist distribution and inventory taking. Packers are expected to remain moderately aggressively over the next couple of weeks in order to maintain current production schedules. This is expected to spark further cash market support, although with the upcoming holidays, the time is limited to push prices significantly higher. Futures trade is expected mixed to mostly higher. The optimism developing in stock prices and other outside markets has the potential to create renewed interest through the live cattle and feeder cattle complex. The rebound of nearby live cattle futures over the last two weeks has planted spot month December contracts well within a sideways trading range given the $10 per cwt price range seen over the last month. This could allow prices to wander higher and lower without sparking significant technical triggers during most of November. Feeder cattle futures remain focused on testing resistance levels and moving prices back to $138 per cwt over the near future. The weekend pressure in grain trade is likely to add fuel to this fire, helping to rebuild optimism in nearby and deferred contracts.
Following the aggressive market tumble in nearby lean hog futures trade Friday, traders remain cautious about stepping back into the market. The $2.52 per cwt loss in December contracts before the weekend break broke through initial support levels and moved spot lean hog futures below $65 per cwt for the first time in a month. The concern that volatile market shifts will continue and limited follow-through support in pork values is creating the potential for further wide market shifts and additional volatility across the entire complex. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady weak. Slaughter Monday is expected at 489,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Firm continued support is trickling into wholesale beef values. This is creating hope and expectation that increased underlying support may continue to develop across the entire complex early in the week. | 1) | The significant price discount in spot December live cattle futures compared to other nearby contracts once again puts the focus on readily available market-ready cattle and heavier-than-expected weights needing to be processed. This could continue to limit upside market potential through the end of the year. |
| 2) | Aggressive price shifts higher in stock market futures trade early Monday, and triple-digit gains in energy trade is likely to spill over into livestock trade during the morning. This has the potential to spark renewed underlying support in live cattle and feeder cattle futures. | 2) | Cash cattle prices have not kept up with the upward price swings in futures or boxed beef trade. This could continue to create market pressure in the entire complex if packers are not willing to aggressively increase cash market prices heading into the holiday seasons. |
| 3) | Active plant speeds continue to keep hog numbers in line, while strong domestic and export demand continues to develop, heading into the holiday season. This may create additional underlying buyer support in the coming days. | 3) | Sharp losses in pork cutout values Friday put increased focus on the extreme volatility across the entire lean hog complex. This could lead to additional widespread price shifts in the upcoming days in futures prices and meat values. |
| 4) | Nearby lean hog futures remain oversold with December prices moving below $65 per cwt late last week. This could create a quick market turnaround in the upcoming days with prices likely to move closer to $68 to $70 per cwt if firm commercial buying support redevelops. | 4) | Spot lean hog futures broke through support levels Friday, moving below $65 per cwt for the first time in a month. The inability to hold October rally above $70 per cwt is expected to add additional market liquidation during the week. |
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| #completecalfcare |
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