Friday Morning Livestock Market Summary - Cash Cattle Support Sought

GENERAL COMMENTS:

Light to moderate trade that developed Thursday afternoon in the North is expected to have set the firmer market tone for the week. The full range of cattle sold Thursday is $177 to $182 per cwt dressed basis, but most cattle sold at $181 to $182 per cwt. This is $1 to $2 per cwt higher than last week's average, allowing for positive market expectations to develop in all other areas. The combination of underlying support in wholesale beef values, futures trade and extremely large packer margins is helping to stimulate a healthy appetite to keep plants at capacity through the near future. Futures trade is expected mixed in sluggish early trade as traders continue to struggle to break away from the light to moderate range that has been established over the last couple of weeks. Even though there remains firm underlying support, the ability to break through short-term resistance levels in live cattle or feeder cattle trade remains uncertain. Given still strong cattle supplies and traditional seasonal pressure through the holidays, it may be difficult to spark aggressive follow-through buying in order to continue to aggressively move prices higher. Friday slaughter runs are expected at 116,000 head.

The market roller coaster continues as traders continue to asses the ability to move additional pork to China. The announcement Thursday focusing on a Phase 1 trade deal that would include scaling back tariff levels still has the market excited. But the overall lack of details about how this will be implemented and specifics of what each side is looking for continues to be a major sticking point that could quickly turn the recent positive support into another market retreat. The fact that the timeline of the two powers meeting is gravitating to sometime in December is once again a major factor that will limit overall market bearishness. There is also a growing realization that China may continue to delay any substantial action on the trade war until the results of the presidential election next November. If Trump is not reelected, this could significantly change the playing field on which both sides have been playing. Early trade Friday is mixed, with underlying fundamental support likely to limit aggressive widespread pressure through the complex, although any additional morning news tidbits may spark short term market swings. Cash hog values are expected to be $1 higher to $1 per cwt lower, with most bids expected steady to weak. Expected slaughter Friday is at 484,000 head. Saturday runs are expected at 243,000 head.

	BULL SIDE		BEAR SIDE
1)	Strong underlying futures support is holding through feeder cattle trade through the end of the week. Traders appear to be willing and able to test short-term resistance levels of $146 per cwt in January futures. A move above this level would post six month highs, signaling additional technical support through the end of the year.	1)	Given current cattle supply levels, the short-term upside market potential appears to be limited over the next couple of weeks. This could allow prices to create a holding pattern through the end of the year.
2)	Stronger cash cattle trade started to develop Thursday afternoon in the North. Prices generally $1 to $2 per cwt higher than last week continues the string of positive weekly moves seen over the last two months, helping to build additional momentum through the entire complex.	2)	Seasonal demand pressure for beef is expected to continue over the near future, likely limiting additional upward movement in wholesale and retail beef prices. This could reduce packer margins through the next couple of months.
3)	Strong gains seen in February futures Thursday is helping to solidify expectations that additional fundamental support is building through the complex as traders focus on an expected uptick in pork demand through the end of the year.	3)	Additional cash market pressure is developing in cash hog values with the national weighted average testing $45 per cwt at the end of the day Thursday. This underlying cash market weakness continues to indicate the burdensome levels of market ready hogs in the system.
4)	Thursday's positive trade announcement that headway is being made on a Phase 1 trade deal, which would including rolling back tariff levels is likely to carry weight early Friday morning as traders focus on moderate progress that is keeping negotiations from breaking down.	4)	Without any trade agreement in writing, and being signed, only limited price support is expected to be seen in hog futures. The expectation that any major meeting by the two parties will be delayed until at least December still leaves a lot of room for uncertainty when it comes to export support for pork.

#completeherdhealth

Thursday Closing Livestock Market Summary - Spot Contracts Iffy, 2020 Livestock Contracts Close Higher

GENERAL COMMENTS:

Livestock markets had a successful day securing gains in the early 2020 contracts. Hog prices are lower on the National Direct Afternoon Hog Report, down $0.23 with a weighted average of $45.21. December corn is down 3 1/2 cents per bushel and December soybean meal is up $6.70. The Dow Jones Industrial Average is up 182.24 points and NASDAQ is up 23.89 points.

LIVE CATTLE:

The board closed mostly higher, boxed beef prices are higher again and slaughter continues to vigorously process cattle. Given the current position of the live cattle market, Friday's cash trade could be impressive. If feeders are going to continue cash cattle prices, it's best to get this week wrapped up because the closer it gets to the prime holiday weeks, the less packers are going to want to work at buying cattle. December live cattle closed unchanged at $119.00, February live cattle closed $0.15 higher at $124.85 and the April board closed $0.30 higher at $125.85. Some fat cattle sold dressed in the North for $177 to $182 but mostly $181 to $188 -- which is $1.00 to $2.00 higher than last week's weighted average in Nebraska. Cash trade is yet to really get underway in the South.

Closing boxed beef prices close higher: choice up $1.15 ($238.29) and select up $1.49 ($213.02) with a total movement of 117 loads (59.52 loads of choice, 31.76 loads of select, 18.19 loads of trim and 7.57 loads of ground beef). Thursday's slaughter is estimated at 118,000 head -- steady with a week ago, and 1,000 head more than a year ago.

FRIDAY'S CASH CATTLE CALL: $2.00 higher. Given the atmosphere of the live cattle market, getting higher money shouldn't be that difficult of a task. The board closed higher in support, packers continue to make excellent money and feeders have been firm about higher asking prices.

FEEDER CATTLE:

On an estimated run of 3,000 head (up 1,187 head from the previous week), Winter Livestock in Pratt, Kansas, sold feeder steers mostly unevenly steady, and heifers weighing 700 to 850 pounds sold mostly steady to $1.00 higher. Demand was good to very good, quality was noted as average to mostly attractive.

Feeder cattle contracts had a good day for the most part -- the only contract that closed lower (and barely lower at that) was the spot November contract, down $0.02 at $146.77. January feeders closed $1.35 higher at $145.77 and March feeders closed $1.52 higher at $145.50. The CME feeder cattle contract for 11/06/19 is down $0.17 at $146.09. The 2020 contracts now lead with the most cumulative volume, and for those cattlemen that decided to hold their calves over and wait to sell them in the early 2020 market -- well, it wouldn't be surprising to see that market pay dividends.

LEAN HOGS:

Lean hog contracts didn't have too shabby of a day, especially considering the current cash hog market and all the back-and-forth worry about the trade agreement with China. December lean hogs closed $0.47 lower at $64.30, February lean hogs closed $1.00 higher and April lean hogs closed $0.77 higher at $80.15. Pork cutouts totaled 321.93 loads with 293.14 loads of pork cuts and 28.79 loads of trim. Pork cutout values: down $0.30 at $80.64. The CME lean hog index 11/05/19: down $0.20 at $60.16.

FRIDAY'S CASH HOG CALL: $1.00 lower. It wouldn't be surprising to see the cash hog market lower again Friday if the cash cattle market takes off and steals the shows -- and if packers aren't in dire need of hogs.

#completeherdhealth

Thursday Midday Livestock Market Summary - Higher Midday Prices for Livestock Contracts

General Comments

Most people start to check out of work week early and start daydreaming of weekend plans come Thursday and Friday. But livestock contracts usually end up being like a good action movie. Whether the market decided to be higher or lower, it spends the first part of the week just merely laying the foundation for Thursday and Friday, similar to how the first part of action movie is leading up to the last 30 minutes of the show. This week is seeming to be no different -- all livestock contracts are starting to warm up and are trading higher in all three sectors. December corn is down 2 3/4 cents per bushel and December soybean meal is up $4.90. The Dow Jones Industrial Average is up 237.64 points and NASDAQ is up 62.81 points.

LIVE CATTLE

Live cattle contracts are cautiously moving higher. December live cattle are up $0.22 at $119.22, February live cattle are up $0.15 at $124.85 and April live cattle are up $0.30 at $125.85. Some cash cattle trades are happening in eastern Nebraska at $181 to $182, all with delayed delivery for the weeks of 11/18/19 and 11/25/19. Most feeders continue to hold out for higher money -- asking prices are anywhere from $116 to $118 in the South, and $185 to $188 in the North. Friday will be interesting to watch to see how many cattle trade, and to see how much higher cash prices are.

Midday boxed beef prices are higher: choice up $0.51 ($237.65) and select up $1.45 ($212.98) with a movement of 61 loads (24.30 loads of choice, 23.03 loads of select, 8.14 loads of trim and 5.83 loads of ground beef).

FEEDER CATTLE

Feeder cattle contacts rally Thursday morning with the most gains seen in the early 2020 contracts. Spot November market is trading $0.15 higher at $146.95, January feeder cattle are trading $1.42 higher at $145.85 and March feeders are trading $1.57 higher at $145.55. Given that live cattle prices are trending higher and cash cattle prices are expected to be higher. Feeder cattle contracts could end the week on a positive note.

LEAN HOGS

The spot lean hog market is trading lower but despite its lower gesture, the rest of the lean hog market place is rallying. A lot of pressure could be put on the December contract with the U.S. and China now believing that the Phase One agreement won't be agreed upon until sometime in December. In the meanwhile, both countries have noted that "if" they can come to an agreement on the Phase One trade deal, both counties will remove additional tariffs in phases, simultaneously. There has been a lot of "if's" and more back-and-forth, flippant attitude surrounding the whole trade agreement than anyone likes to admit, and at this point the market is unenthused about any chatter surrounding the matter and just wants to see a signed agreement.

December lean hogs are trading $0.60 lower at $64.17, February lean hogs are trading $0.82 higher at $73.60 and April hogs are trading $0.32 higher at $79.70. Given Wednesday's light trade volume, and Thursday's inability to share hog prices because of confidentiality could be because packers have their needs meet for the week and don't need to exhaust resources to buy for the fun of it.

The projected lean hog index for 11/06/19 is up $0.04 at $60.19, and the actual for 11/05/19 came in at $60.16, down $0.20. Prices are unavailable due to confidentiality on the National Direct Morning Hog Report, but the five-day rolling average is listed at $46.98. Pork cutouts totaled 143.62 loads with 130.72 loads of pork cuts and 12.90 loads of trim. Pork cutout values are down $0.78 at $80.16.

#completecalfcare

Thursday Morning Livestock Market Summary - Growing Uncertainty Surrounds China Pork Demand

GENERAL COMMENTS:

Cash cattle trade remains quiet going into Thursday morning with both sides looking for additional direction. Recent support in beef values and extremely attractive packer margins continue to push the limit on current cattle. Even though supply tightness is expected over the next couple of months, packers have great incentive to push capacity levels in order to take advantage of current margins. This should improve bids over the next couple of days. Asking prices are expected to redevelop at $117 live in the South and $185 and higher through the North. Futures trade is mixed following a pullback in all livestock trade at midweek. It is too early to tell if this shift lower will turn into a full blown market correction, which has been brewing, or if traders will be able to hold prices near the top end of the trading range, as they look for further support through the end of the week. Currently, it appears holding December contracts above $120 per cwt may remain a challenge given the seasonal pressure typically seen through the end of the year. Thursday slaughter runs are expected at 118,000 head.

Pressure swept through lean hog futures Wednesday, erasing previous gains. Back-and-forth price moves continue to be sparked by the on-again and off-again notion that China will sweep into the market and rid excess pork supplies. There is no doubt China needs pork supplies due to African swine fever. But the question traders have yet to definitely answer is: Will China buy its way out of production losses? And if so, will they buy the pork from the U.S.? Traders continue to have hope aggressive China purchases are developing, which will put even more attention on Thursday morning's export sales report, and overall movement and sales of pork to China over the last week. Cash hog values are expected to be $1 higher to $1 per cwt lower, with most bids expected 50 cents lower. Expected slaughter Thursday is at 490,000 head. Saturday runs are expected at 245,000 head.

	BULL SIDE		BEAR SIDE
1)	Aggressive midweek gains in wholesale beef values continue to point to strong overall demand for beef through early November. Triple-digit gains developed in choice and select cutout values, creating expectations of further late-week support.	1)	Sharp losses developing in feeder cattle trade have accounted for a $2 to $2.50 per cwt tumble through the week. This is creating concern that aggressive follow through weakness will develop, setting the tone for a weaker November ahead.
2)	Expectations of continued cash market gains at the end of the week are developing despite the pullback in futures trade at midweek. The focus on aggressive packer margins is expected to create incentive for packers to keep plants full in the near term. In order to do this, added money is expected for cash sales.	2)	Limited follow-through interest in live cattle futures at midweek is creating uncertainty about further short-term market support through the complex. If traders are unable to regain footing and challenge short-term resistance levels near $120 per cwt in December contracts, selling pressure is likely to develop as traders may prepare for a moderate correction.
3)	Traders are looking for good news in Thursday morning's export sales report. The hope that all of the focus on continued demand needs in China will spark renewed active sales continues.	3)	Despite renewed buyer optimism in lean hog futures, the lack of confirmation that aggressive Chinese imports from the U.S. are in the near future could quickly sour trader attitudes.
4)	World demand for pork continues to grow as the effect of African swine fever appears far from over. This should help open the door for increased pork sales, not only to affected countries, but most other countries which have already exported pork to China in order to backfill supply levels.	4)	Traders are closely watching the morning Weekly Export Sales and Shipments report Thursday. Without a moderate to strong presence of China export sales in the report, further market bearishness is likely to develop as traders continue to point to China as the main hope to get out of the supply glut seen through the country.

#completeherdhealth