Tuesday Morning Livestock Market Update - Market Jitters Continue on Election Day

 General Comments:

Limited cash cattle market activity is expected once again Tuesday as traders continue to focus on the overall lack of volume last week, and the inability for packers to follow the previous gains in futures trade during late October. Asking prices are still generally hard to pin down, as are packer bids. This could delay active live cattle trade until the second half of the week once again. The widening gap between formula and negotiated cash cattle trade over the last three weeks is adding additional uncertainty to the entire cash cattle market, creating concerns that with rising COVID-19 cases, growing uncertainty about future beef demand growth and continued aggressive plant production could further hinder cash cattle markets during the remainder of the year. Cattle futures are expected to be mixed in a narrow-to-moderate trading range in both live cattle and feeder cattle trade, while the overall focus will continue to remain on the political arena through the day and well into the evening. Outside market direction will likely be a significant point of interest to all traders in the livestock market. Early week trade Monday ranged from moderate-to-firm losses, to light-to-moderate gains through the day and is likely to keep prices moving in an uneven but mixed trading range through most of the morning. Fundamentally, traders are focusing on the ability to maintain early week support in boxed beef values, while closely monitoring the open interest changes. The ability to limit further market liquidation over the next several days will go a long way in helping to develop market stability in both live cattle and feeder cattle trade.

Lean hog futures are attempting to reestablish market stability following the strong pullback in price levels during mid-October. Over the last two weeks, December lean hog futures have been contained within a $1.50 per cwt trading range, as traders appear to be establishing firm price support near $66 per cwt. The lack of follow-through support in pork cutout values is creating additional long-term concerns to the market, but given the aggressive hog numbers available to packers through the end of the year, there is likely to be limited short-term upside market support without significant changes in export demand growth or aggressive gains redeveloping in pork values. Lean hog futures are expected to remain in limbo during the day with traders closely watching election coverage similar to most of the country. This could allow prices to wander within a moderate price range during the next couple of days as overall market fundamentals may not be a significant focus in the upcoming trading sessions. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady to $1 lower. Slaughter Tuesday is expected at 489,000 head. Saturday runs are expected at 278,000 head.

	BULL SIDE		BEAR SIDE
1)	Boxed beef values bounced higher during early week activity, creating renewed underlying support and hope that additional fundamental buyer support will redevelop over the near future.	1)	Limited cash market gains in cattle trade given last week's futures market rally is creating significant long-term concerns about the ability to sustain market growth during the rest of the year.
2)	Following a $7 per cwt rally in nearby November feeder cattle futures over the last week, firm buyer support remains well entrenched throughout the market as traders appear to be building on recent market momentum, helping to set seasonal lows, and move onto higher prices through the end of the year.	2)	Cattle futures are expected to remain volatile over the next couple of days as growing uncertainty over market direction following the election is likely to distract traders from focusing on fundamental or even technical market factors.
3)	Pork cutout values have stabilized during early week trade. This is expected to create underlying support across the entire lean hog complex, helping to regain buyer interest in the next few trading sessions.	3)	Cash hog values have struggled to find any sense of market stability during early November. This is expected to add further price pressure to cash values as packers limit buying interest but are still maintaining aggressive plant output.
4)	The ability to defend support levels of $66.15 per cwt seen during mid-October in December contracts will be essential to sparking renewed early November buyer support. This could help to rebound price levels over the upcoming week based on expected stability in wholesale pork values.	4)	Steady pressure in nearby and deferred lean hog futures is quickly eroding price premiums previously seen in summer 2021 contracts. Although hog numbers are still expected to decline in the upcoming months, growing concerns of demand growth in domestic and export markets continue to cast a shadow over the complex.

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Monday Closing Livestock Market Summary - Cattle Contracts Secure Mild Profits

Monday was mostly lackadaisical in its trade as the market is anxiously waiting Tuesday's election to hopefully answer some questions moving forward. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.31 with a weighted average of $61.35 on 6,857 head. December corn is down 1 cent per bushel and December soybean meal is down $3.50. The Dow Jones Industrial Average is up 423.45 points and NASDAQ is up 46.02 points.

LIVE CATTLE:

The live cattle complex closed modestly higher, but amid the hesitation looming throughout the marketplace, a higher close is commendable. December live cattle closed $0.25 higher at $108.55, February live cattle closed $0.12 higher at $110.52 and April live cattle closed $0.17 higher at $113.82. Monday's cash cattle trade was expected as nothing transpired and both packers and feedlot managers are looking to the end of the week before jumping into any business. Monday's slaughter is estimated at 119,000 head, 4,000 head more than a week ago and 3,000 head more than a year ago.

Last week's purchase of 57,981 head of negotiated cattle was the second lightest of the year falling second behind the week of April 19, 2020, when only 20,736 head traded and plants were shut down.

Boxed beef prices closed higher: choice up $0.55 ($208.65) and select up $1.38 ($192.62) with a movement of 145 loads (87.21 loads of choice, 16.67 loads of select, 23.26 loads of trim and 17.68 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Higher. It's unlikely that we will see any cattle trade as early as Tuesday given that the market will be absorbed in election news, but when the market does trade, steady to higher prices are expected. Feedlots know that packers need cattle as they bought sparsely last week and are going to make them pay up.

FEEDER CATTLE:

Feeder cattle contracts fought some nearby pressure as Monday closed, but overall the market was able to secure profits before closing. November feeders closed $0.42 lower at $136.97, January feeders closed $0.07 lower at $134.05 and March feeders closed $0.30 higher at $133.82. While the market traded gingerly in anxiousness of Tuesday's presidential election, it did help that the nearby corn contracts closed slightly lower. At Joplin Regional Stockyard in Carthage, Missouri, compared to a week ago, steer and heifer calves sold $5.00 to $10.00 higher while yearlings traded $4.00 to $8.00 stronger. Supplies were rather light and strong buyer interest helped scaled the market higher. After last week's ice storm, the region is thankful to have a couple of days of warm and dry conditions which make shipping cattle much easier. The CME feeder cattle index Oct. 30: down $0.22, $136.48.

LEAN HOGS:

Cattle contracts were able to squeeze minimal profits out of the day's trade before closing, but the lean hog market didn't have the same luck. December lean hogs closed $0.37 higher at $65.95, February lean hogs closed $0.25 lower at $65.30 and April lean hogs closed $0.42 lower at $67.97. As the hog contracts work their way lower, down from resistance levels, it's important to remember just how significant the last hog rally was and that this downward trend was forthcoming. Pork cutouts totaled 358.50 loads with 331.62 loads of pork cuts and 26.89 loads of trim. Pork cutout values: up $0.34, $84.14. Monday's slaughter is estimated at 493,000 head, 6,000 head more than a week ago and 1,000 head more than a year ago. The CME lean hog index for Oct. 29: down $1.00, $74.49.

TUESDAY'S CASH HOG CALL: Lower. As the country anxiously waits for election news, the likelihood of a stronger cash hog market is slim.

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Monday Midday Livestock Market Summary - Election Pressure Looms Over Contracts

 General Comments

The livestock market continues to trade doggedly as traders are leery of an uncertain marketplace amid election week. Until there's clear consensus as to who will be president for the next four years, the market could continue to trade in a meek manner. Feeder cattle and lean hog contracts are seeing the biggest regression as losses dance around $1.00 weaker, but the live cattle market isn't far behind, trading mostly $0.60 to $0.70 lower. December corn is down 3 3/4 cents per bushel and December soybean meal is down $4.50. The Dow Jones Industrial Average is up 402.85 points and NASDAQ is up 30.22 points.

LIVE CATTLE

Following last week's slim cash cattle trade, feedlots are expected to price cattle higher this week. It would be helpful to feedlot's cause if the board would trade higher, but election pressure is keeping the contracts scaling lower. December live cattle are down $0.47 at $107.87, February live cattle are down $0.40 at $110.00 and April live cattle are down $0.40 at $113.25. Showlists this week are higher in Nebraska, Colorado and Kansas, but slightly lower in Texas. Monday's trade is panning out to be a typical Monday - little interest is surfacing is feedlots have yet to post their asking prices for the week.

Last week's negotiated cash cattle trade total a significantly lighter movement of 57,981 head. Of that 47,217 head are committed for delivery in the next two weeks while the remaining 10,764 head are committed for the following 15 to 30 days.

Boxed beef prices are higher: choice up $0.55 ($208.65) and select up $1.04 ($192.28) with a movement of 71 loads (44.92 loads of choice, 9.09 loads of select, 8.45 loads of trim and 8.26 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts are trading lower into Monday's afternoon as the market lacks support heading into the new week. November feeders are down $1.07 at $136.32, January feeders are down $0.82 at $133.30 and March feeders are down $0.52 at $133.00. Following last week's vast advancements, the market was hopeful to add further onto what last week gained but as the election pressures the market, traders are pulling up. Last week's feeder cattle and calve sales were mostly steady as the country ranged from $3.00 lower to $2.00 higher, coast to coast. The market's biggest hindrance throughout the countryside was the ice storm and snow that blew across much of the Southern Plains and lower Midwest, which made hauling livestock incredibly difficult.

LEAN HOGS

The hog complex is scaling lower as the market balances pressure from resistance levels and the election. December lean hogs are down $0.60 at $64.57, February lean hogs are down $1.00 at $64.55 and April lean hogs are down $0.92 at $67.47. Midday pork cutout values saw a nice little uptick in support but with long-term demand still unknown, it wouldn't be surprising to see packers an arm's length from the cash market.

Hog prices are lower on the National Direct Morning Hog Report, down $0.89 with a weighted average of $60.18, ranging from $56.00 to $62.01 with a weighted average of $60.18 on 4,155 head and a five-day rolling average of $61.37. Pork cutouts total 170.65 loads with 159.88 loads of pork cuts and 10.77 loads of trim. Pork cutout values: up $2.23, $86.03.

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Monday Morning Livestock Market Summary - Limited Early Direction Likely

 General Comments:

Following sluggish cash cattle activity with trade steady in the South and steady to weak trade in the North is putting more emphasis on the overall direction of the market during early November. It is possible that there could be some early week developments in cash cattle traded in order for packers to get late week deliveries, but more likely packers will go through the week looking for additional trade volume through the middle to end of the week. With the month of November now on the books, packers are likely to have access to additional contracted cattle for November deliveries, which can be used to offset the limited cash market trade seen last week. Showlist distribution and inventory taking is likely to be the main event Monday although feeders are likely to post firm price levels to cattle on showlists as the week continues. Futures trade is expected mixed to moderately higher with traders focusing on building on last week's market support in live cattle and feeder cattle trade. The ability to likely establish a market bottom in nearby and deferred contracts is helping to create additional momentum across the complex.

Lean hog futures continue to remain under pressure with follow-through weakness in pork cutout values and cash prices. The underlying softness in the complex continues to create longer-term concern based on continued production levels through the end of the year. Although moderate export business continued in late October, traders have quickly backed away from the aggressive expectations of lean hog futures support during spring and summer contracts. There is still the expectation that hog numbers will ease but given the lack of aggressive movement in demand over the last couple of weeks, there is uncertainty that this lower production will sustain the significant premiums across the complex. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady to $1 lower. Slaughter Monday is expected at 486,000 head.

	BULL SIDE		BEAR SIDE
1)	Last week's rally in feeder cattle futures has broken through short-term resistance levels of $136.47 per cwt in November contracts. This is likely to add additional early week momentum to the complex Monday morning.	1)	Lack of cash cattle market support given the recent rally in futures trade is disappointing, as packers continue to focus on steady-to-lower prices in order to fuel the upcoming fall and winter demand needs.
2)	Packers are going into the week short-bought given the limited activity last week in cash cattle markets. This will likely create additional opportunities for feeders as they increase asking prices on cattle during the week.	2)	The strong market rally in feeder cattle futures is impressive, but the lack of fundamental shifts in the markets over the last week is creating concerns about the sustainability of recent market moves.
3)	Lean hog futures continue to remain oversold, giving the expectation of renewed commercial buyer support moving into the complex during early November.	3)	December lean hog futures tumbled lower Thursday, stopped only by trade limits of $3 per cwt. This will allow for expanded trade limits in all lean hog complex of $4.50 per cwt, causing significant concerns of further end of the week market weakness.
4)	Cash price stability is expected to continue during the near future with packers still aggressively sourcing market-ready hogs in order to maintain current production schedules.	4)	Pork cutout values tumbled lower once again Friday, creating additional concern that recent strong demand support for the pork market is quickly eroding. This could add further widespread pressure as nearby lean hog contracts are heavily influenced by wholesale pork values.

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