Tuesday Morning Livestock Market Summary - Mixed Futures Trade Expected Tuesday

GENERAL COMMENTS:

Cash cattle market activity remains undeveloped early in the week with bids and asking prices nowhere to be found early Tuesday morning. The focus remains on the wild market shift lower in futures trade, although the strong upward movement in beef values during early December could help put more market stability back into both cash and futures trade over the next couple of trading sessions. Packers are expected to remain moderately short-bought as they try to make the best of the few normal processing weeks before the holiday schedules limit overall chain speed through the end of the year. Futures are expected to open mixed to moderately lower with follow-through pressure from the previous two trading sessions still creating a weak undertone in the complex.

Packers are expected to return to the complex with mixed to higher price levels early Tuesday morning. The full range of cash market prices is expected to remain 50 cents lower to $1 per cwt higher as traders continue to focus on the firmness developing in both pork values as well as continued support in the lean hog futures complex. Even though the cash market range is likely to remain wide, most bids will remain steady to 50 cents higher through early-morning trade. Futures trade is expected to remain mixed with a combination of follow-through support and position-taking through the morning. The underlying tone of the market remains firm with the focus on moves in February and April contracts.

	BULL SIDE		BEAR SIDE
1)	Sharp upward price shifts in boxed beef value continues to offset the recent tumble in futures trade as buyers continue to focus on building beef demand following the recent market pressure. With cutout values posting triple-digit gains Monday, the potential for additional meat buying is likely to help draw additional stability to the futures complex.	1)	December live cattle futures have broken through short-term support and moved through November lows of $17.10 per cwt during early-week trade. This move continues to create additional concern that more liquidation may follow. The next support level is set at $15.96 per cwt set through the middle of October. If these levels do not hold, it is expected that additional longer-term pressure may continue to be seen through early December.
2)	Live cattle futures continue to focus on increased market volume as price stability has begun in early-week trade. The ability to sustain stable price levels in a narrow trading range will help to build additional market momentum through the month of December, which is needed to set short-term support levels in nearby futures contracts.	2)	Lackluster cash market interest early in the week will continue to leave the cattle market directionless with overall cash activity not expected to develop until midweek or later. The recent market support may be quickly dashed by the strong pullback in futures trade.
3)	Firming buyer activity is expected to continue in pork values during the first full week of December. The strong movement higher in most primal values is helping to create additional buyer interest through the entire complex. This may bring additional underlying support to the market through the end of the year.	3)	Despite the strong upward market tick in futures trade, the inability to carry this support to the cash market level during early-week trade has caused some concern through the entire complex. Packers have access to a growing number of market ready hogs, which may limit overall spending and trickle down to further pressure through the entire complex.
4)	Continued strong buyer support is helping to draw longer-term market activity into nearby and deferred futures trade. With February and April futures holding values above $71 and $75 per cwt respectively, follow-through buyer support will likely move quickly into the complex over the near future. Packer interest will remain firm with an expected procurement rate of 465,000 expected Tuesday.	4)	The lack of consistency of futures support through the market is limiting the move higher in the complex. Even though strong gains developed in February through June contracts early in the week, December contracts remain under firm pressure as traders focus on a strong discount in spot month futures.

Monday Closing Livestock Market Update - Cattle Futures Shift Lower in Early Week Trade

GENERAL COMMENTS

Cash cattle markets are quiet with bids and asking prices undeveloped through the afternoon. Showlists are larger with most areas posting increased cattle available to packers. This is not expected to spark active trade through the next couple of days with most trade likely to be pushed off to the last half of the week. According to the closing report, the national hog base is unchanged compared with the Prior Day settlement ($54.00-$60.50) weighted average $59.27. The corn futures moved lower in light activity. December futures were 5 1/4 cents lower Monday. The Dow Jones Index is 58 points higher with the Nasdaq down 72 points.

LIVE CATTLE

Live cattle futures closed mixed to mostly lower after trading in a wide range Monday ($0.85 Lower to $0.27 Higher). A combination of short-covering activity and follow-through market weakness developed through the session Monday following limit and near-limit losses in most nearby contracts Friday. The overall tone of the cattle futures complex remains extremely weak as prices have continued to break through November lows, with traders testing October lows in several nearby contract months. This could spark some additional market volatility over the next several days, as traders try to repair some of the damage done in the last several days. Beef cut-outs: higher, $1.93 higher (select, $185.54) and up $2.20 (choice, $208.19) with moderate to good demand and moderate offerings (39 loads of choice cuts, 22 loads of select cuts, 14 loads of trimmings, 26 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL:

Steady. Cash cattle activity remains at a standstill and likely will stay that way until midweek or later. Showlists are larger in most areas, although this may not spark interest in packers earlier than normal. Asking prices and bids may not be widely seen until Wednesday morning, delaying overall interest.

FEEDER CATTLE:

Feeder cattle futures closed mixed in a moderate range after posting moderate-to-strong losses most of the Monday session ($0.37 lower to $0.47 higher). The inability to spark additional wide-ranging liquidation following Friday's market tumble helped to bring some curious buyers back into deferred contracts. The overall break away from the recent losses could help to build some much-needed stability through the week and spark additional longer-term buyer interest. CME cash feeder index for 12/01 is $156.69 down $0.51.

LEAN HOGS:

Firm gains developed in most lean hog futures through the second half of trading activity Monday ($0.32 lower to $1 higher). Buyers continue to focus on the support in market fundamentals and potential for firm pork values through the end of the year. It is uncertain just how much additional volume will be able to develop through the rest of the week, but if traders can create stability at these price levels, commercial interest will likely move into the market. Carcass values shifted higher following firm gains in all primals except loins and ribs. Pork cut-out: $83.94 up $0.59. CME cash lean index for 11/30 $63.26, up $0.27. DTN Projected lean index for 12/01 $63.92 up $0.66.

TUESDAY'S CASH HOG CALL:

Mixed. Cash hog markets are expected to remain mixed in a narrow range Tuesday morning with packers continuing to focus on aggressive procurement levels, although the availability of market-ready hogs is keeping many of them from having to push prices significantly higher day after day. Most bids are expected to be stuck in a range from 50 cents lower to $1 per cwt higher. Tuesday's slaughter is expected at 465,000 head with an expected Saturday run at 203,000 head.

Monday Midday Livestock Market Summary - Moderate Pressure Developing in Cattle Trade

GENERAL COMMENTS: 

Firm losses have quickly moved through the complex. This is bringing additional market pressure in both live cattle and feeder cattle trade. The overall lack of support seen Friday has brought additional uncertainty to the entire market. Corn prices are lower in light trade. December corn futures are 6 cents per bushel lower. Stock markets are mixed in light trade. The Dow Jones is 199 points higher while Nasdaq is down 16 points.

LIVE CATTLE:

Strong pressure has stepped back into the complex following a volatile up-and-down market shift through the morning. Even though price moves have been limited to moderate shifts compared to the strong triple digit losses that developed Friday, the weaker tone of the market continues to sweep through the complex. This may bring additional support to the market and may bring additional selling later in the week. December live cattle contracts have broken through short-term support seen in November, and now traders continue to focus on October lows as the next support level. Cash cattle markets are sluggish with light trade seen similar to prices paid Thursday afternoon. Live cattle have been sold at $120 with $190 seen dressed. There continues to be bids seen through most areas, although it is uncertain how much additional trade will develop given the pressure in futures markets. Beef cut-outs at midday are higher, $3.62 higher (select) and up $2.23 per cwt (choice) with light movement of 52 total loads reported (20 loads of choice cuts, 8 loads of select cuts, 14 loads of trimmings, 10 loads of ground beef).

FEEDER CATTLE:

Strong market pressure has redeveloped in cattle trade, although losses have been limited to 40 to 80 cent losses at midday. This pressure follows a volatile up and down move through the morning where prices ranged from firm losses, to strong gains, now focusing on additional losses through the last half of the trading session. The sharp triple-digit losses seen Friday carries even more pressure into the complex as traders try to focus on the long-term direction of the market.

LEAN HOGS:

Lean hog futures remain mostly higher as buyer support stepped back into the complex Monday following early market pressure. Front month December futures still remain firmly lower, with a 65 cent per cwt loss, while all other nearby contracts are holding steady to 70 cent gains as market expectations of additional underlying support is moving through the complex. Cash prices are unchanged on the National Direct morning cash hog report. The weighted average price is unchanged at $59.27 per cwt with the range from $55.00 to $60.00 on 6,677 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $0.22 at $59.62 per cwt with the range from $57.00 to $60.00 on 3,280 head reported sold. The National Pork Plant Report posted 139 loads selling with carcass values falling $0.83 per cwt. Lean hog index for 11/30 is at $63.26 up $0.27 with a projected two-day index of $63.92, up $0.66.

U.S. beef exports higher in every month of 2017

Depreciating dollar increases attractiveness of U.S. goods.

U.S. beef exports in 2017 exceeded the prior year’s exports in every month, according to the latest U.S. Department of Agriculture (USDA) trade data through September. Year-to-date beef exports through September total just under 2.1 billion lb., compared with 1.8 billion lb. during the same time in 2016, a 15% increase. 

USDA reported that much of the growth in U.S. beef exports can be attributed to increased shipments to Japan, which has received 29% more beef so far in 2017 compared with 2016. This rise has amounted to more than 140 million lb. of beef, USDA said.

“The growth in U.S. beef exports has coincided with stronger domestic beef production and lower prices relative to recent years,” USDA explained, adding that an additional factor influencing U.S. trade has been the relative strength of the country’s dollar compared with its competitors. Between January and September 2017, the U.S. dollar depreciated by roughly 8%, according to the St. Louis, Mo., Federal Reserve’s Trade-Weighted U.S. Dollar Index.

“A depreciating dollar relative to a trading partner makes U.S. goods more attractive, because more dollars can be purchased with the same amount of the partner’s currency,” the agency explained.