General Comments:
Following mostly steady cash cattle prices last week, packers and feeders are expected to slowly enter the holiday week with uncertainty as to how many cattle will be traded through the shortened week. Although most cattle were reported to be sold at steady money with last week's price levels at $110 live and $172 per cwt, it will be interesting to see the weekly averages when they are released Monday due to reported ranges expanding through the end of last week ($108-$110 live and $166 to $172 dressed). Active cash market activity is not expected until late Tuesday or Wednesday, but with plants dark Thursday for Thanksgiving, it is likely that both sides will get at least a good start on needed cash sales by the end of the day Wednesday. This could lead to an odd week of cash market trade, and potentially some moderate price shifts for the last full week of November. Futures trade is expected mixed to mostly higher as traders have the first chance to trade the Cattle on Feed report. With report totals not moving significantly from pre-report estimates, wide market shifts in price direction are not expected, but the opportunity to regain limited buyer support and push prices higher following the weekend break could lead to additional market volatility. With a holiday-shortened week, trade volume is expected to remain limited in not only cattle futures, but all markets. This is the wildcard of the market going into the week as the limited trade could bring about even more price volatility in the coming weeks.
Lean hog futures quickly bounced back Friday afternoon with triple-digit losses essentially offsetting previous losses. The active buyer support had little to do with significant change in direction of the market at the end of the week, but more focus on the fact that the pork complex continues to be undervalued and concerns of significant demand erosion may have been overplayed. February and April futures closed Friday with gains above $2 per cwt, creating a stronger base on which traders can rest as prices have bounced back above Thursday's support levels. Increased market shifts are expected over the next week, although holiday-shortened trade will likely keep many traders on the sidelines. The lack of trade volume has the potential to spark moderate-to-wide market swings in either direction as traders are likely to be heavily influenced by outside market direction with less focus on hog market fundamentals. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady 50 cents lower. Slaughter Monday is expected at 492,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle on feed totals, and cattle placement levels came in below estimates, which is expected to create slight-to-moderate market support during early trade. |
1) | Cattle on feed numbers remain at 12 million head, even though below pre-report estimates, is still considered negative given the abundant supply levels plaguing the cattle industry over the next few months. |
| 2) | Continued strong gains to develop in boxed beef markets, further adding buyer support and the expectations for higher asking prices for cash cattle through Thanksgiving week. |
2) | Holiday limited schedules at packing plants and shortened trading during the week could limit aggressive cash market activity in many areas. Weaker cash cattle trade could signal a significant change in market direction through the end of the year. |
| 3) | Cash hog prices bounced higher late last week as the previous market pressure seems to have eroded the ability for packers to access hogs at significant discounts. The higher prices could spark renewed interest through the end of November. |
3) | Pork cutout values continue to shift higher and lower in a wild market swing. This is limiting confidence in the complex as traders seem to have little indication as to the long-term direction of pork values over the next several weeks. |
| 4) | Aggressive triple-digit gains Friday afternoon quickly offset the previous day's losses and sparked active buyer support as traders moved back into the market and prices bounced off support price levels. This could create momentum for nearby hog futures over the next couple of days. |
4) | Growing concerns of China's pork-buying role over the coming months as pork prices in China are falling. Domestic production continues to rebound in the country, which could further pressure U.S. pork prices. |
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| #completecalfcare |
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