GENERAL COMMENTS:
All eyes were on the cattle complex Monday with traders quickly setting the tone of lower moving markets as triple-digit losses flooded into live cattle trade. At this point, feeder cattle futures just tried to follow along, not wanting to be hung out to dry if further longer-term market shifts are seen. The CFTC report last Friday posted active long liquidation by noncommercial traders. It is important to remember that these reports are a week delayed, so this fund adjustment is not totally up to date with market prices and movements. However, this shift did create additional softness in the market with buyers unwilling to become active Monday.
Hog futures posted moderate gains through the session as traders continued to slowly but steadily step back into the complex. This is expected to create additional market support, but pork values need to keep adjusting higher through early November. Hog prices are unreported at this time Monday due to packer submission issues. The release of cash hog prices will be delayed. December corn closed steady and December soybean meal closed down $4.60 at $437.5. The Dow Jones Industrial Average is up 34.54 at 34,095.86.
LIVE CATTLE:
Significant weakness was seen in live cattle futures Monday with all live cattle futures contracts posting triple-digit losses through the session. Strong pressure started out the trade day and seemed to be relatively stable at the lower price points, but a second round of late day selling activity flooded the market. This pushed February through April contracts to $3 per cwt losses at closing bell. The realization that fund traders continued to liquidate cattle positions in the last CFTC report doesn't come as a huge surprise given the volatility in the complex over the last three weeks, but many traders had been looking for a much more linear path to higher prices following last week's rally. Currently, October lows continue to hold, but the late day pressure has put a hint of doubt in the ability to attract buyers in the near term. Cash cattle markets are dead quiet Monday with bids and asking prices not yet well established.
New showlists appear to be mixed, significantly higher in Kansas, higher in Texas, but lower in Nebraska and Colorado. Last week, the 5-area weekly weighted average was $184.89 per cwt, $0.87 per above the previous week. December live cattle closed $2.55 lower at $181.325, February live cattle closed $3.25 lower at $181.975 and April live cattle closed $3.23 lower at $184.6.
Monday's slaughter is estimated at 122,000 head, 3,000 head less than a week ago and unchanged from a year ago.
Boxed beef prices closed lower: choice down $0.62 ($301.72) and select down $1.65 ($270.36) with a movement of 124.66 loads (49.68 loads of choice, 26.96 loads of select, 37.78 loads of trim and 10.24 loads of ground beef).
TUESDAY'S CATTLE CALL: Steady to $1 higher. Given the moderate cash market support last week, feeders are looking for support despite early week losses in futures trade. There may be a significant gap between asking prices and bids through most of the week, leaving the potential for another late week of cattle trade.
FEEDER CATTLE:
Feeder cattle contracts got caught up in the downward spiral of live cattle futures trade Monday. Very little fundamental changes were seen Monday when it comes to either production costs affecting feeder cattle prices, supply levels of cattle, or cash values, but when active selling lined up in live cattle trade at opening bell and did not subside until closing bell, feeder cattle traders got caught up in the age old game of "follow the leader". This allowed feeder cattle futures to close $3.25 to $3.75 per cwt lower for the day, significantly hurting the chances of a positive week and it's just Monday.
Nearby futures remain rooted above lows seen on Oct. 24, but buyers remain much more cautious than they did last week about the potential to continue to spark strong aggressive gains back into the complex. November feeders closed $3.43 lower at $237.175, January feeders closed $3.33 lower at $236.425 and March feeders closed $3.25 lower at $239.1. The CME Feeder Cattle Index for Nov. 2: up $1.30, $238.92.
LEAN HOGS:
Lean hog futures were the bright spot of livestock trade with moderate gains developing early and holding through the entire complex. Unlike the cattle market, the lean hog futures seems to be able and willing to make small to moderate adjustments, with much less emotionally led price swings, at least for the time being. The firming tone in pork values and cash hog prices is helping to build additional fundamental support during early November. December lean hogs closed $0.65 higher at $72.4, February lean hogs closed $0.48 higher at $75.95 and April lean hogs closed $0.53 higher at $81.25.
Monday's hog slaughter is estimated at 487,000 head, 12,000 head more than a week ago and 4,000 head less than a year ago. Pork Cutouts totaled 220.06 loads with 195.07 loads of pork cuts and 24.99 loads of trim. Pork cutout values are up $4.33 at $91.61. The CME Lean Hog Index for November 2: down $0.39, $76.45.
TUESDAY'S HOG CALL: Steady to $1 higher. Cash hog values are called steady to firm early Tuesday as packers continue to secure plant needs for the upcoming week.
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