GENERAL COMMENTS:
It was a powerful day for the cattle contracts as the markets charged on higher, rallying on the interest of traders amid such strong fundamentals. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.29 with a weighted average of $89.18 on 4,765 head. December corn is down 2 3/4 cents per bushel and December soybean meal is down $9.20. The Dow Jones Industrial Average is up 417.06 points.
Monday's Cold Storage report shared that total red meat supplies in freezers were up 1% from the previous month and up 17% from last year. Total pounds of beef in freezers were up 2% from the previous month and up 19% from last year. Frozen pork supplies were down slightly from the previous month but up 14% from last year. Stocks of pork bellies were up 3% from last month and up 183% from last year.
LIVE CATTLE:
It's almost like Monday's market woke up, stretched, poured a good cup of coffee and said, "it's time awaken the bulls!" Monday's market traded in strong fashion as traders had time to absorb last Friday's supportive Cattle on Feed report, the dynamic nature of last week's cash cattle market, the continued support in boxed beef prices and throughput again. With the spot December contract closed at yet another new contract high, cattlemen are excited to see where this market could run to given that it's fundamentals are so supportive. December live cattle closed $1.70 higher at $154.12, February live cattle closed $1.45 higher at $156.97 and April live cattle closed $1.17 higher at $159.42. Monday's slaughter is estimated at 126,000 head, steady with a week ago and 6,000 head more than a year ago. New showlists are lower in all regions.
Last week's negotiated cash cattle market was a powerful one as not only did the market see over 102,000 head trade, but feedlots were also able to push prices to the highest point they've been all year ago with the nation's weighted average being $148.94. The last time the nation's weighted average was above $148.94 was during the week of Aug. 15, 2015. Last week's negotiated cash cattle trade totaled 102,849 head. Of that, 82% (84,745 head) were committed for the nearby delivery, 18% (18,104 head) were committed for the deferred delivery.
Boxed beef prices closed higher: choice up $4.21 ($257.92) and select up $1.25 ($225.61) with a movement of 86 loads (43.69 loads of choice, 17.38 loads of select, 9.61 loads of trim and 15.34 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Higher. With showlists lighter and packers continuing to run aggressive processing speeds, the cash cattle market will likely be higher again this week.
FEEDER CATTLE:
The feeder cattle market closed higher as the market rallied off the supportive nature of Friday's Cattle on Feed report, from the weaker close in the corn market and from the supportive tones that seeped over from the live cattle market. November feeders closed $0.80 higher at $179.15, January feeders closed $1.57 higher at $181.95 and March feeders closed $1.57 higher at $183.82. It's very likely that the fat cattle market will again trade higher this week and continue this stronger, upward pace all the way through the end of the year. If the live cattle market does indeed continue to see slow, but gradual support, and the corn market doesn't pose any major threat, then the feeder cattle market could stand a chance at rallying too. But before the market can rally aggressively, buyers are going to need to see more margin, which will likely come as fat cattle trade higher. At Joplin Regional Stockyards in Carthage, Missouri, compared to last week, feeder steers weighing under 525 pounds traded $8.00 to $13.00 higher and the heavier weights sold $2.00 to $6.00 higher. Feeder heifers under 625 pounds traded $9.00 to $11.00 higher with the heavier weights trading steady to $3.00 higher. Feeder cattle supply over 600 pounds was 53%. The CME Feeder Cattle Index for Oct. 21: up $0.68, $173.62.
LEAN HOGS:
The lean hog complex closed mostly lower as the market is questioning how much higher it should trade. Traders will need to see excellent demand from the market in the forms of strong consumer interest, a strong cash hog market and another week of supportive export demand. Tuesday's market may trade higher as traders will note that pork prices did close higher Monday afternoon, and the day did process a large volume of hogs. Monday's Cold Storage report did share that, "stocks of pork bellies were up 3% from last month and up 183% from last year," which could be part of the reason why bellies closed lower Monday afternoon. December lean hogs closed $1.20 lower at $87.92, February lean hogs closed $0.07 lower at $90.45 and April lean hogs closed $0.05 higher at $93.90. Pork cutouts totaled 342.60 loads with 299.36 loads of pork cuts and 43.23 loads of trim. Pork cutout values: up $0.99, $101.93. Monday's slaughter is estimated at 491,000 head, steady with a week ago and 8,000 head more than a year ago. The CME Lean Hog Index for Oct. 20: up $0.29, $94.05.
TUESDAY'S CASH HOG CALL: Higher. Given that packers are aggressively processing hogs, it's likely that they'll begin to procure the week's needs come Tuesday.
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