GENERAL COMMENTS:
Watching the cattle futures markets Monday appeared to be similar to watching the weather in the Midwest, "If you don't like it, wait a little while and it will change." Live cattle and feeder cattle futures swung from strong early gains to moderate to firm losses, and then back firmly higher in most contract months by closing bell.
So much of the anticipation of last Friday's Cattle on Feed report had already been factored into the market that traders are trying to unwind some of the bearish focus they were expecting. Add to this the fact that markets will remain quiet through most of the week due to markets closed Thursday due to Thanksgiving.
Lean hog futures could not get much positive attention through the day as additional fundamental concerns are eroding price levels, but lean hog futures are still stuck in a sideways trading range.
Hog prices closed higher on the Daily Direct Afternoon hog report, up $5.42 with a weighted average of $67.22 on 8,455 hogs. December corn closed up 2 1/2 at $4.695 and December soybean meal closed up $6.90 at $460.2. The Dow Jones Industrial Average is up 203.76 at 35,151.04.
LIVE CATTLE:
Live cattle futures closed mixed in light to moderate trade with initial buy orders flooding into the complex following the better-than-expected news from cattle placement numbers in Friday's cattle on feed report. But buy orders quickly ran dry, allowing room for waiting sell orders, erasing initial gains. Once all of the weekend order planning cleared the market, traders got back to work, with a mixed close the result of the up and down price shifts during the day.
Nearby contracts sustained narrow losses, while moderate to firm gains developed in deferred contracts based on positive news from feeder cattle placements on Friday's report. It appears that this Cattle on Feed report has essentially been worked through the market, unlike October's report, which kept markets volatile for nearly three weeks. This is likely to help traders focus more on beef market fundamentals, allowing potential support for any additional holiday demand.
Cash cattle trade is undeveloped Monday with asking prices and bids unavailable. Showlists being distributed Monday appear to be generally mixed. Trade is expected to be accomplished earlier this week than usual due to Thanksgiving on Thursday, but it still may be midweek before active cash trade is seen in most areas. The five-area weekly average price last week moved to $177.82 per cwt. This is $2.09 per cwt lower than the previous week.
December live cattle closed $0.28 lower at $175.475, February live cattle closed $0.15 lower at $176.65 and April live cattle closed $0.30 higher at $178.725.
Monday's slaughter is estimated at 125,000 head, steady with a week ago and unchanged from a year ago.
Boxed beef prices closed higher: choice up $1.88 ($295.75) and select up $0.25 ($270.95) with a movement of 134.64 loads (77.35 loads of choice, 27.23 loads of select, 5.44 loads of trim and 24.62 loads of ground beef).
TUESDAY'S CATTLE CALL: Steady. Tuesday activity is expected to remain generally sluggish, although a few asking prices and even a token bids may develop as both sides are hoping to find common ground and get cattle on the books by Wednesday evening.
FEEDER CATTLE:
Following back and forth trade at different times in the Monday session, feeder cattle futures posted firm, triple-digit gains, helping to draw more attention on longer-term market direction and less based on current supply levels. Initial strong post report gains flooded into the market, but quickly eroded into moderate to firm losses. Once traders seemed to get past trying to shift and adjust positions from previous market volatility, the ability for steady and strong buyer interest was able to make significant price shifts in all contracts.
Limited trade is expected through most of the week in both futures trade as well as many cash feeder cattle sales around the country due to the Thanksgiving holiday.
January feeders closed $1.35 higher at $229.85, March feeders closed $1.33 higher at $232.3 and April feeders closed $1.33 higher at $235.825. The CME Feeder Cattle Index for Nov. 16: down $2.72, $225.92.
LEAN HOGS:
Lean hog futures continued to show limited interest Monday, although prices continued to push lower as follow-through pressure slowly but steadily developed based on softer overall market fundamentals. Going into the holiday week is going to make it even harder to get a good handle of any fundamental strength developing in the market due to generally light and sporadic trade in many areas.
Nearby futures continue to take the brunt of developing market pressure, but even with the current losses, limited technical direction is seen due to prices hovering within the moderate sideways trading range seen over the last month. This sideways pattern is still not in any danger of being breached, but the recent selling pressure has kept the market moderately oversold, allowing for a possible holiday market bounce.
December lean hogs closed $0.63 lower at $70.35, February lean hogs closed $0.40 lower at $75.05 and April lean hogs closed $0.48 lower at $80.975. Monday's hog slaughter is estimated at 486,000 head, 16,000 head more than a week ago and 2,000 head less than a year ago. Pork Cutouts totaled 311.15 loads with 263.99 loads of pork cuts and 47.16 loads of trim. Pork cutout values are down $2.07 at $86.09. The CME Lean Hog Index for Nov. 16: down $0.59, $75.09.
TUESDAY'S HOG CALL: Steady to $1 higher. Cash markets are expected to remain unsettled through the entire week, packers continue to push processing limits early in the week due to the upcoming holiday schedules. The early week cash market support may help to draw needed momentum Tuesday morning.
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