GENERAL COMMENTS:
Cattle futures have led the complex lower Monday morning with triple-digit losses in both live cattle and feeder cattle trade. The spark that led to the early week price pressure is focused on last week's CFTC report, where long positions were quickly eroded from the previous week. Although cattle traders continue to hold a sizable net-long position, the adjustments quickly sparked traders' attention, with active selling seen through all contracts. Market fundamentals remain relatively unchanged over the last several days, but noncommercial interest is still trying to find its footing following sharp losses in October. This could lead to some additional market shifts within the current range in the near future. Lean hog trade, on the other hand, is posting light to moderate gains with very limited additional market direction developing through the morning. December corn is up 1 1/2 at $4.788 and December soybean meal is down $7.80 at $434.3. The Dow Jones Industrial Average is up 61.29 at 34,122.61.
LIVE CATTLE :
Triple-digit losses developing in all live cattle contracts Monday morning has once again put the cattle complex back on the defensive. With spot December contracts able to push contracts $6 per cwt higher over the last two weeks, traders were taken back by last week's CFTC report which posted a strong liquidation of long positions the previous week. It is important to realize that CFTC is always a week delayed, but the fact that noncommercial and fund traders continue to back away from the cattle market at the end of October is adding concern to potential market support in the near future. It appears that nearby contracts have found temporary support with $2 to $2.50 per cwt losses Monday morning, but traders are closely monitoring further activity later in the week.
Cash cattle activity remains extremely quiet Monday morning, which is generally expected. Asking prices and bids are not yet established, but asking prices should start to develop over the next couple of days. This could easily push trade toward the last half of the week. Cattle trade last week took place Thursday and Friday with northern dressed trade seen about $2 per cwt higher, while southern live trade reported steady to generally 50 cents per cwt lower than the previous week. The softness in futures trade Monday morning may also limit cash market support in the upcoming days. December live cattle are $2.00 lower at $181.875, February live cattle are $2.43 lower at $182.8, April live cattle are $2.45 lower at $185.375.
Boxed beef prices are lower: choice down $0.93 ($301.41) and select down $0.97 ($271.04) with a movement of 36.00 loads (18.06 loads of choice, 13.76 loads of select, zero loads of trim and 4.36 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures quickly tumbled lower Monday morning following the active pressure in live cattle trade. The long liquidation seen in live cattle futures during late October is grabbing the feeder cattle complex. It is important to understand and keep in mind that overall open interest in the feeder cattle complex is a fraction of the open interest in the live cattle market. By nature, there is more noncommercial of fund traders in the live cattle market than the feeder cattle complex, and therefore a significant shift in fund holdings seen the last week of October has a mirrored effect in feeder cattle trade by association more than direct sales.
Buyer support has been hard to find Monday morning, allowing prices to quickly erode to $2 to $3 per cwt lower. It is possible that feeder cattle trade will hover within this current range through the rest of the trading day. November feeders are $2.08 lower at $238.525, January feeders are $2.45 lower at $237.3 and March feeders are $2.28 lower at $240.075.
LEAN HOGS:
With most of the attention of livestock trade focused on triple-digit losses in live cattle and feeder cattle trade, lean hog futures have shown limited but supportive buyer interest during morning trade Monday. The consistent gains seen in all nearby contracts is helping to not only bring additional support to the market, but the potential to establish price levels above Friday's close. Limited long-term direction is likely through Monday, but the ability to etch out a higher close and potentially stimulate additional buyer interest is a great way to start a week, especially when the rest of the complex is focusing on bearish news. December lean hogs are $0.55 higher at $72.3, February lean hogs are $0.70 higher at $76.175 and April lean hogs are $0.68 higher at $81.4.
Hog Prices are unreported due to confidentiality on the Daily Direct Morning Hog report. Pork Cutouts totaled 103.14 loads with 89.01 loads of pork cuts and 14.13 loads of trim. Pork cutout values are down $0.96 at $85.41.
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