Monday Morning Livestock Market Summary - Traders Expected To Exhibit Caution

GENERAL COMMENTS:

The nearly steady uptrend in live cattle futures since early September does not show signs of slowing down. Demand remains strong. Buyers remain aggressive. Technically, the market is overbought, but it was for basically the entire month of October. Selling into an overbought market has not been the right thing to do. Strong cash is supplying plenty of support with another significant jump on Friday. Cash does not trade on Mondays and there may not even be any showlists distributed as buyers and sellers wait. Friday's Commitment of Traders report showed funds long 60,462 contracts, an increase of 4,618 from the previous week. They hold 43,162 short positions, which is a decrease of 3,650 contracts for the week.

Hogs just cannot seem to get a break from the bearishness overhanging the complex. December futures appear to be settling into a sideways trading pattern. Support is near Friday's low and needs to hold. A significant gap remains below the market on the price charts, but so far price has been able to avoid moving there. The strong possibility of the signing of phase one of the trade deal with China keeps the market holding out hope for export demand to increase. However, hog numbers are plentiful with heavier weights providing more tonnage to the market.

	BULL SIDE		BEAR SIDE
1)	The trend is your friend and the strength exhibited in the cattle complex has been surprising. This has kept traders confidently buying futures aggressively.	1)	The cattle complex has been overbought technically for over a month with no price retracement. Resistance may be seen soon with a price correction inevitable.
2)	Strong support in cutouts cannot be argued with. Demand is strong with packers needing to step up purchases in order to meet that demand. Consumer price resistance has yet to be seen.	2)	Cattle weights have been climbing slowly and, even with strong demand and aggressive packer purchasing, there seems to be plenty of supply available. This could be bearish if demand slows.
3)	Technically, December hogs may be settling into a sideways trading pattern as the market absorbs heavy supply. This could build strong support.	3)	Large charts gaps remain below current prices in December through July contracts. Chart gaps generally are filled at some point before the contract is settled.
4)	Lower pork prices should increase demand in light of significantly higher beef prices. Any positive indication of a partial trading agreement with China could send futures significantly higher.	4)	International demand for pork has not improved as much as expected due to the impact of African swine fever. Traders may remain bearish unless the market proves otherwise.

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Friday Closing Livestock Market Summary - Beef Demand Inspires the Market to Keep Closing Higher

GENERAL COMMENTS:

It's been a productive week for cattle markets and a depressing market for lean hog producers once again. Prices are lower on the National Direct Afternoon Hog Report, down $0.10 with a weighted average of $48.95. December corn is down 3/4 cent per bushel and December soybean meal is down $0.50. The Dow Jones Industrial Average is up 280.31 points and NASDAQ is up 87.09 points.

From Friday to Friday, livestock futures contracts scored the following changes: December live cattle up $3.45 and February live cattle up $3.15; November feeder cattle up $3.75 and January feeder cattle up $4.40; December lean hogs down $0.47 and February lean hogs down $0.77.

LIVE CATTLE:

In less than two months, the December live cattle market has gained nearly $20.00. Just when it seems like the bears may be right, the market grabs another pen of fats, processes them and sells them for higher money yet again. If there is one thing that has saved the fall fat cattle market, it is, without a doubt, demand that has kept this boat sailing. Harmony is a rare tune that whistles in the cattle industry, and especially in recent times, but with packers being able to pay feeders more money each week and still netting a profit themselves -- the cattle industry isn't such a bad place to be after all.

A light to moderate trade developed in the North at $175 to $180, which is $5.00 higher than last weeks weighted average. Live cattle have traded at $113 and have been bid up to $115. It wouldn't be unlikely to see Saturday trade and higher prices yet again.

Closing boxed beef prices are up yet again: choice up $1.02 ($233.20) and select up $1.02 ($207.51) with a total movement of 79 loads (31.45 loads of choice, 25.66 loads of select, 6.13 loads of trim and 15.75 loads of ground beef). Friday's slaughter is estimated at 115,000 - which is 7,000 more than a week ago, and 3,000 less than a year ago.

MONDAY'S CASH CATTLE CALL: Steady. Monday isn't a fun market to call, let alone guess the moral. Fat cattle hardly ever sells on Monday and Tuesdays. It will be interesting to watch the fat cattle trade over the next couple of weeks. Will packers keep processing speeds wrapped up or will they sit on the cattle that are in their pens now and not worry about actively buying, because they now have cattle bought with delayed delivery? The biggest driving force will be demand and the boxed beef's ability to remain steady or grab for higher prices yet again.

FEEDER CATTLE:

On an estimated run of 4,895 (up 1,520 head from the previous week) Ogallala Livestock Auction in Ogallala, Nebraska sold steer calves under 700 pounds steady to $7.00 higher, heifers under 700 pounds were $2.00 to $5.00 higher and demand was noted to be good. Accompanied with support from both the live cattle market and the vigorous sales throughout the countryside, the feeder cattle market has held its own and closed with fancy gains Friday afternoon. November feeder cattle are up $1.52 at $149.12 and January feeder cattle are up $1.32 at $146.00. The CME feeder cattle index 10/31/19: up $0.76 at $145.99.

LEAN HOGS:

We said it earlier in the live cattle section, but it's evident that a market that has lash demand for its product prospers. After hearing that trade conversations with China are going well and as planned, producers may be able to keep their hopes up that an export outlet will soon be opened. With cash trade weakening and pork producers barely able to break even, things are getting tough in the hog industry, especially with weights on the rise.

The lean hog market closed mixed. Nearby contracts lower, deferred contracts showing some support. December lean hogs closed $1.55 lower at $64.45 and February lean hogs closed $0.75 lower at $72.57. Pork cutouts totaled 242.05 loads with 197.60 loads of pork cuts and 44.46 loads of trim. Pork cutout values: down $0.41 at $75.64. The CME lean hog index 10/30/19: down $0.39 at $62.74.

MONDAY'S CASH HOG CALL: $1.00 lower. With the board closing lower and no push for packers to actively buy hogs, Monday will probably follow in its typical suit and be lower.

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Friday Midday Livestock Market Summary - Cards Are Down for Livestock Contracts

General Comments

Largely supported by the lavish gains in the cash cattle trade, cattle contracts step higher while the lean hog market takes the back burner.

December corn is down 2 1/4 cents per bushel and December soybean meal is up $0.80. The Dow Jones Industrial Average is up 237.07 points and NASDAQ is up 54.21 points.

LIVE CATTLE

Remember the song, "The Devil Went Down to Georgia," by Charlie Daniels? Part of the song sings, "guess you didn't know it but I'm a fiddle player too, and if you'd care to take a dare, I'll make a bet with you. Now you play a pretty good fiddle boy but give the devil his due I'll bet a fiddle of gold against your soul, 'cause I think I'm better than you. The boy said, "my name's Johnny and it might be a sin, but I'll take your bet

"And you're gonna regret 'cause I'm the best there's ever been".

This week's cash cattle market feels like the fiddle playin' that went on in Charlie Daniels' song. Nebraska sold some dressed cattle live for $180.00 ($5.00 higher than last week's weighted average) for delivery in two weeks, the week of 11/18/19. Now you might shrug your shoulders and say God gave Johnny his fiddle playing skills so what's the big fuss and any time you can have a $5.00 cash rally trumpets should sing and fireworks should be lit off like it's the 4th of July ... BUT ... There are a couple of big variables floating around that could impose some pressure on the cash cattle market. First, any time cattle are sold with delayed delivery you cringe a little for the cattle that will be sold in the time in between now and then. Secondly, slaughter has been strange this week, and much lower than anticipated. Packers could make it up in a big Saturday kill, but you never know until the reports slide across your desk. Nevertheless, Friday's cash cattle trade was a win for the week, but it may cause some stress in the upcoming weeks if packers pull back their slaughter efforts and boxed beef prices decided they've rallied enough.

Midday boxed beef prices are higher: choice up $0.16 ($232.34) and select up $0.42 ($206.91) with a movement of 45 loads (16.44 loads of choice, 17.07 loads of select, 2.61 loads of trim ad 9.22 loads of ground beef).

FEEDER CATTLE

Thursday's sideways trade paid off for the feeder cattle market. Nearby and deferred contracts are all rallying well over a dollar. November feeder cattle are up $1.37 at $148.97 and January feeder cattle are up $1.65 at $146.32. Sale barn markets this past week held their ground but saw some softer sales when weather impacted the turn out. For most of the country this upcoming week should yield better weather.

LEAN HOGS

Ya can't win them all, lean hog contracts, ya can't win them all. Despite a well-attempted effort to keep the board at least steady, lean hog contracts have weakened and let the cattle contracts take the lime light. December lean hogs are down $2.07 at $63.90 and February lean hogs are down $1.20 at $72.12. It's doubtful that the second half of the day will rebound much if any at all.

The projected lean hog index for 10/31/19 is down $0.65 at $62.10, and the actual index for 10/30/19 came in down $0.39 at $62.74. Prices are higher on the National Direct Morning Hog Report, up $0.54 with a weighted average of $49.59, ranging from $45.00 to $50.47 on 4,825 head and a five-day rolling average of $50.88. Pork cutouts totaled 150 loads with 117.59 loads of pork cuts and 32.41 loads of trim. Pork cutout values are done $1.36 at $74.69.

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Friday Morning Livestock Market Summary - New Month, New Direction?

GENERAL COMMENTS:

Packers and feeders still have a lot of work to do before the end of the week. Although a few additional cattle sold Thursday in the South steady with Wednesday's rally of $2 per cwt higher than last week, a lot of cattle still need to find a home before the end of the day. Packer interest should improve through the morning, although it could be mid- to late-afternoon before the two sides can agree on price levels and active trade develops. Both sides will continue to hold their line through much of the morning with asking prices expected around $114 to $113 live in the South and $180 to $182 dressed in the North. Early bids are not likely to change significantly from those passed over the last couple of days. Mixed trade is expected Friday morning, focusing on the pullback, which developed Thursday. The losses can easily be explained away as end-of-month profit taking, given the recent market rally and expectations through the complex that a correction was due. Uncertainty remains if buyers are yet willing to step back into the complex, or if they feel additional market pressure is in store through the end of the week. Even if prices continue to shift lower Friday, this does not indicate aggressive long-term pressure will follow next week, as traders still have to make a decision if prices will continue higher in early November, or establish a sideways trend near these recent highs. Friday slaughter runs are expected at 116,000 head.

Lean hog futures are expected mixed in early trade Friday. The ability for lean hog futures to end the day Thursday following aggressive triple-digit morning losses is viewed as bullish, but it is uncertain if this support will continue through the end of the week. The entire market is starting to get tired of the "will they, or won't they" news cycle and mentality when it comes to China and a partial trade agreement. Given the history over the past year, this should not surprise anyone. But there is so much additional hope built into the entire process, that it is hard not to get sucked into the drama developing ahead of anything planned. The ability of nearby contracts to close higher Thursday and potentially spark additional gains Friday has little to do with bullish market expectations, just that there is little additional news available to suggest breaking outside of the current trading range. Cash hog values are expected to be steady to $1 per cwt lower, with most bids expected steady to 50 cents lower. Expected slaughter Friday is at 482,000 head. Saturday runs are expected a 235,000 head.

	BULL SIDE		BEAR SIDE
1)	Support in boxed beef values has remained strong through the last half of October. This suggests overall support remains at a time when seasonality indicates market softness. This points to continued underlying support through the near future.	1)	Given aggressive gains during October, traders were disappointed by the lack of follow-through interest at the end of the month. This crack in resolve leaves the door open for further back-pedaling in early November.
2)	Additional cash cattle trade is still needed in most areas, although early Southern trade is expected to have set the tone for higher prices through the week. Unless a major shift is seen in futures trade Friday, feeders will remain aggressive with cattle prices through the end of the week expecting gains of $1 to $3 per cwt higher than last week.	2)	Cattle weights continue to shift higher, indicating that even with the increased cash and futures prices over the last several weeks, market currentness has not yet been reached.
3)	The ability of lean hog futures to regroup following generally disappointing China export results Thursday morning is showing increased resolve through the complex. The ability to build off early week lows in all nearby contracts could help to boost underlying market support during early November.	3)	Cash hog prices continue to erode with packers still struggling to keep up with abundant hog supplies. This is expected to continue through early November, limiting the need for added money in order to fill procurement needs.
4)	Despite back-and-forth speculation on whether a partial trade deal will be agreed upon in November, there is still hope and some underlying confidence that positive developments will be seen. This is helping build additional support into deferred contracts as traders look for long-term market help.	4)	Concerns circulated from China putting doubts on if an agreement will be able to be reached in the near term. With no definite timeline or place for a meeting to replace the one scheduled for mid-November, even more uncertainty is in the complex.

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