GENERAL COMMENTS
The livestock complex closed mixed as the live cattle complex closed hesitantly, not finding the support it needed, the feeder cattle contracts ran higher thanks to cheaper corn prices and the hog complex rounded the day out mixed as it too lacked enough support. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.53 with a weighted average of $81.69 on 5,768 head. March corn is down 5 3/4 cents per bushel and January soybean meal is up $8.00. The Dow Jones Industrial Average is down 482.78 points.
LIVE CATTLE:
The live cattle complex closed mixed as the market's nearby contracts fell short of mustering up enough support to close higher, but the market's deferred contracts closed 2 to 17 points higher. With packers expected to pull back production, traders are leery of what this week's cash cattle market will do. Will prices continue to trade higher as front-end supplies are extremely current? Or will prices chop sideways if packers don't show the market much attention? Time will tell, but this week's cash cattle market isn't expected to trade until Wednesday, or potentially Thursday. Boxed beef prices saw stiff pushback throughout Monday's market, but it is expected that prices could find a seasonal bottom at some point this week. December live cattle closed $0.12 lower at $153.22, February live cattle closed $0.05 lower at $155.82 and April live cattle closed steady at $159.57. New showlists appear to be mixed, higher in Nebraska/Colorado, but lower in Texas and Kansas.
Monday's slaughter is estimated at 127,000 head, 1,000 head less than a week ago and 6,000 head more than a year ago.
Last week Southern live cattle traded for $153.50 to $155, but mostly at $155, which is fully steady with the previous week's weighted average. Northern dressed cattle traded for $245 to $249, but mostly at $249, which is $4.00 higher than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 77,500 head. Of that, 79% (61,479 head) were committee for the nearby delivery, while the remaining 21% (16,021 head) were committee for the deferred delivery.
Boxed beef prices closed lower: choice down $6.62 ($243.31) and select down $3.45 ($221.11) with a movement of 132 loads (78.94 loads of choice, 23.35 loads of select, 15.41 loads of trim and 13.89 loads of ground beef). The choice/select spread sits at $22.20.
TUESDAY'S CATTLE CALL: $1.00 higher. It's doubtful that cattle begin to trade on Tuesday, but I suspect that feedlots will attempt to keep prices elevated and at least gain $1.00.
FEEDER CATTLE:
The feeder cattle market wasted no time running higher throughout Monday's market as traders saw the potential given that corn prices closed $0.05 to $0.06 lower in the nearby contracts. Cost of gains have been limiting to buyers as they see higher inputs in nearly every sector of the business. The spot January contract broke above its 100-day moving average, which hasn't been done since September. If corn continues to trade lower, then the feeder cattle market could keep trading higher so long as the live cattle market and fat cattle trade is supportive. January feeders closed $1.32 higher at $183.77, March feeders closed $1.10 higher at $186.37 and April feeders closed $0.90 higher at $189.52. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, at their midsession point and when compared to last week, feeder steers and heifers were trading unevenly steady. Steer calves were trading $4.00 to $7.00 higher, with instances of $12.00 higher. Heifer calves over 450 pounds traded unevenly steady, but heifers under 450 pounds were trading $15.00 to $20.00 higher. Feeder cattle supply over 600 pounds was 41%. The CME Feeder Cattle Index Dec. 2: down $0.89, $178.14.
LEAN HOGS:
The lean hog complex closed mixed as the market would like to rally amid cheaper corn prices, but with consumers not showing the market much interest, mixed values summarized the market's closing tone. December lean hogs closed $0.35 lower at $82.07, February lean hogs closed $0.10 higher at $90.52 and April lean hogs closed steady at $95.82. Given that the market rallied aggressively late last week and pushed the spot February contract to its nearby resistance level, the market now needs to find enough support to either keep the complex trading sideways or potentially higher. It didn't the help that the pork cutout value closed $2.48 lower - which came as a $9.44 drop in the belly and a $5.26 drop in the ham drug the carcass price lower. Pork cutouts totaled 321.07 loads with 281.55 loads of pork cuts and 39.52 loads of trim. Pork cutout values: down $2.48, $86.46. Monday's slaughter is estimated at 491,000 head, 2,000 head less than a week ago and 36,000 head more than a year ago. The CME LEAn Hog Index for Dec. 1: down $0.37, $82.87.
TUESDAY'S HOG CALL: Higher. Given that Monday's market didn't see much interest, Tuesday's market should see more support from packers, and if not by Tuesday, certainly by Wednesday.
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