GENERAL COMMENTS:
Following last week's bearish turn in cattle markets, the ability to push prices higher in all contracts was seen as a significant victory. It was not hard to find underlying support in commodity markets Monday with most markets moving higher during the initial trading day. This created follow-through buyer support in cattle and hog futures. With live cattle and feeder cattle futures closing moderately higher, prices did pull back from earlier gains, creating some uncertainty about follow-through buyer support Tuesday morning.
Lean hog futures have continued to gain moderate support, moving above short-term resistance levels in nearby contracts, this may open the door for further technical support in the upcoming days. Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.14 with a weighted average of $66.09 on 1,529 hogs. December corn closed up 13 1/4 at $4.773 and December soybean meal closed up $19.70 at $469.1. The Dow Jones Industrial Average is up 54.77 at 34,337.87.
LIVE CATTLE:
Live cattle futures shifted moderately higher, but the upward momentum is only a small move compared to the bearish price tumbles over the last week. December futures led the complex higher with a $0.75 per cwt gain but closed well below session highs as initial buyer support faded in the last couple hours of trade.
There is still an underlying concern that this week's cattle on feed report will cause additional pressure to prices as traders are still reeling from higher-than-expected placement numbers in feedyards through the fall months. This could create market volatility and instability in prices through much of the week.
Cash cattle are quiet Monday afternoon with bids and asking prices still unavailable. Showlists appear to be lower in Kansas and Texas, but larger in Nebraska and Colorado.
Given the trend over the last few weeks, it is likely that trade may be delayed until late in the week. December live cattle closed $0.75 higher at $174.925, February live cattle closed $0.60 higher at $175.25 and April live cattle closed $0.53 higher at $177.45.
Monday's slaughter is estimated at 125,000 head, 3,000 head more than a week ago and 2,000 head less than a year ago.
Boxed beef prices closed mixed: choice down $2.61 ($297.85) and select up $1.82 ($269.24) with a movement of 92.77 loads (43.27 loads of choice, 27.22 loads of select, 10.59 loads of trim and 11.69 loads of ground beef).
TUESDAY'S CATTLE CALL: Steady. Limited activity is expected until late in the week, although there may be some additional asking prices developing through the day Tuesday.
FEEDER CATTLE:
Feeder cattle futures regained a portion of last week's losses although the market remains weak and uncertain with the upcoming cattle on feed report at the end of the week. But the overall market seems to be so oversold that downward pressure is going to have a hard time sticking unless continual bad news is seen in the market.
November contracts posted a $1 gain, pulling back from earlier highs, but January futures led the market higher, gaining $1.87 at closing bell. November feeders closed $1.00 higher at $230.725, January feeders closed $1.88 higher at $228.30 and March feeders closed $1.45 higher at $230.075. The CME Feeder Cattle Index for Nov. 9: down $4.02, $231.40.
LEAN HOGS:
Lean hog futures were the leader of the livestock complex Monday. Although price levels didn't beat gains in the feeder cattle futures, the $1.45 per cwt gain in spot December contracts was enough to post a short-term high, breaking through resistance levels seen in the market. This focuses on a combination of fundamental and technical support building in the hog complex and is likely to help spark follow-through buyer support in the near future.
December lean hogs closed $1.45 higher at $73.35, February lean hogs closed $1.45 higher at $77.025 and April lean hogs closed $1.10 higher at $82.625. Monday's hog slaughter is estimated at 488,000 head, 1,000 head more than a week ago and 2,000 head more than a year ago. Pork cutouts totaled 273.80 loads with 227.45 loads of pork cuts and 46.35 loads of trim. Pork cutout values are down $2.65 at $86.77. The CME Lean Hog Index for Nov. 9: Down $0.59, $76.28.
TUESDAY'S HOG CALL: Steady to $1 higher. The firmness developing in the entire lean hog complex is expected to help firm cash bids Tuesday morning.
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