GENERAL COMMENTS
It's been a glorious day for the cattle market as cash cattle are trading $4.00 to $5.00 higher, and both the live cattle and feeder cattle contracts are rallying because of the cash market's success. Traders were looking for the follow-through support from the cash market to move the market higher and come Friday, feedlots finally got what they were asking. December corn is down 4 cents per bushel and December soybean meal is down $2.50. The Dow Jones Industrial Average is up 244.46 points and NASDAQ is up 75.49 points.
LIVE CATTLE
Packers caved Friday morning and have been buying cattle at $130 live in Kansas, Nebraska and Texas, which is $4 to $5 higher than last week, and dressed cattle concurred $204 in both Iowa and Nebraska. This week comes with a lot of lessons to be learned. First, the only reason feedlots were able to demand the prices they were was because they all sought out to move the cash market higher. If some feedlots would had taken packers' offers earlier in the week, the feedlots demanding higher prices would have been undermined and the week would have traded steady with last week's prices. Secondly, we cannot overlook the fact that vigorous processing speeds help create a lively market when there is demand at the meat counter. To let supply and demand fundamentals work like they should, when beef prices are scaling higher, it should be common to see increased processing speeds as packers should want to chase the money that's being offered at grocery stores. Lastly, I hope that this week's success in terms of moving the cash market higher not only comes as an accomplishment to the monetary side of the market for feedlots, but also to the psychological side. As feedlots have gained substantial leverage in the last two weeks, I hope that they see that they have an opportunity here to be the drivers of the market instead of only being the recipients.
Upon seeing the success that flourished in the cash cattle market, the live cattle contracts have turned to higher prices and are trading just shy of $1.00 higher in the nearby contracts. December live cattle are up $0.97 at $131.60, February live cattle are up $0.97 at $136.82 and April live cattle are up $0.77 at $139.60.
Boxed beef prices are higher: choice up $0.25 ($290.47) and select up $0.73 ($268.95) with a movement of 57 loads (39.36 loads of choice, 12.07 loads of select, zero loads of trim and 5.53 loads of ground beef).
FEEDER CATTLE
It's been an easy day for the feeder cattle contracts as the support that's come from live cattle market is helping rally the future contracts and will most likely reignite some buying ambition early next week. The market is trading modestly higher but still isn't sold on taking on the resistance that looms around $160. It's unlikely that traders will try to move the market past that resistance before the week's end, but if momentum continues to push live cattle higher, it may be an obstacle that's attempted next week. November feeder cattle are up $0.92 at $158.95, January feeders are up $0.80 at $158.97 and March feeders are up $0.67 at $160.00.
LEAN HOGS
The lean hog market is split trading lower in its nearby contracts, but slightly higher in the deferred contracts. The market lost some of its hype as the cattle contracts stole the livestock complex's attention upon the cash cattle market's jump. December lean hogs are down $1.02 at $76.85, February lean hogs are down $0.40 at $79.77 and April lean hogs are down $0.12 at $83.97. This week has been a wild one for the lean hog complex as daily slaughter estimates have been revised and pork cutouts have jumped all over the place. Heading into next week's trade hopefully the market levels out and these volatile swings subside, but until the holidays are over and holiday buying is done with, the market runs the risk of seeing chaos.
The projected lean hog index for Nov. 4 is up $0.37 at $78.69, and the actual index for Nov. 3 is down $0.38 at $78.32. Hog prices are lower on the National Direct Morning Hog Report, down $0.84 with a weighted average of $58.64, ranging from $57.00 to $61.25 on 4,063 head and a five-day rolling average of $60.11. Pork cutouts total 212.79 loads with 192.15 loads of pork cuts and 20.64 loads of trim. Pork cutout values: up $3.33, $101.02
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