Monday Morning Livestock Market Update - Market Volatility Likely During Early Week Trade

 General Comments:

Moderate cash cattle trade through the end of last week helped to support the idea that further cash market gains may continue to develop over the next couple of weeks. Live cattle trade remained steady to $1 per cwt higher with late week trade moving closer to the $107 per cwt level ($1 higher). The biggest market momentum was seen in dressed trade with prices mostly $5 to $7 per cwt higher, $165 to $167 per cwt, although the entire range was $160 to $167 per cwt. The momentum in futures trade and boxed beef activity is expected to spark renewed interest in cash trade, although limited cash market activity is expected Monday. Most of the focus is likely to be placed on showlist distribution and inventory taking. Packers are expected to remain moderately aggressively over the next couple of weeks in order to maintain current production schedules. This is expected to spark further cash market support, although with the upcoming holidays, the time is limited to push prices significantly higher. Futures trade is expected mixed to mostly higher. The optimism developing in stock prices and other outside markets has the potential to create renewed interest through the live cattle and feeder cattle complex. The rebound of nearby live cattle futures over the last two weeks has planted spot month December contracts well within a sideways trading range given the $10 per cwt price range seen over the last month. This could allow prices to wander higher and lower without sparking significant technical triggers during most of November. Feeder cattle futures remain focused on testing resistance levels and moving prices back to $138 per cwt over the near future. The weekend pressure in grain trade is likely to add fuel to this fire, helping to rebuild optimism in nearby and deferred contracts.

Following the aggressive market tumble in nearby lean hog futures trade Friday, traders remain cautious about stepping back into the market. The $2.52 per cwt loss in December contracts before the weekend break broke through initial support levels and moved spot lean hog futures below $65 per cwt for the first time in a month. The concern that volatile market shifts will continue and limited follow-through support in pork values is creating the potential for further wide market shifts and additional volatility across the entire complex. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady weak. Slaughter Monday is expected at 489,000 head.

	BULL SIDE		BEAR SIDE
1)	Firm continued support is trickling into wholesale beef values. This is creating hope and expectation that increased underlying support may continue to develop across the entire complex early in the week.	1)	The significant price discount in spot December live cattle futures compared to other nearby contracts once again puts the focus on readily available market-ready cattle and heavier-than-expected weights needing to be processed. This could continue to limit upside market potential through the end of the year.
2)	Aggressive price shifts higher in stock market futures trade early Monday, and triple-digit gains in energy trade is likely to spill over into livestock trade during the morning. This has the potential to spark renewed underlying support in live cattle and feeder cattle futures.	2)	Cash cattle prices have not kept up with the upward price swings in futures or boxed beef trade. This could continue to create market pressure in the entire complex if packers are not willing to aggressively increase cash market prices heading into the holiday seasons.
3)	Active plant speeds continue to keep hog numbers in line, while strong domestic and export demand continues to develop, heading into the holiday season. This may create additional underlying buyer support in the coming days.	3)	Sharp losses in pork cutout values Friday put increased focus on the extreme volatility across the entire lean hog complex. This could lead to additional widespread price shifts in the upcoming days in futures prices and meat values.
4)	Nearby lean hog futures remain oversold with December prices moving below $65 per cwt late last week. This could create a quick market turnaround in the upcoming days with prices likely to move closer to $68 to $70 per cwt if firm commercial buying support redevelops.	4)	Spot lean hog futures broke through support levels Friday, moving below $65 per cwt for the first time in a month. The inability to hold October rally above $70 per cwt is expected to add additional market liquidation during the week.

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Friday Closing Livestock Market Update - Live Cattle Contracts Fully Supported

 Cattle contracts kept with the rally into Friday's closing bell and successfully regained lost ground over the week. The lean hog market traded in a sideways pattern as resistance levels push the market lower from the industry's recent high. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.95 with a weighted average of $60.18 on 4,214 head. December corn is down 2 1/2 cents per bushel and December soybean meal is down $5.40. The Dow Jones Industrial Average is down 66.78 points and NASDAQ is up 4.30 points.

From Friday to Friday, livestock futures scored the following changes: December live cattle up $2.68, February live cattle up $1.75; November feeder cattle up $0.30, January feeder cattle up $1.80; December lean hogs down $0.67, February lean hogs up $1.48.

LIVE CATTLE:

Friday's live cattle market rounded out the week on a strong note as the futures market successfully closed higher yet again. This week's cash cattle trade was a big win for northern feedlots that were able to rally the market $3.00 to $4.00 and clean up a healthy movement of cattle. Southern feedlots had a strong week as well, but given that the North was selling discounted to the South, their advancements were a little stronger this week. December live cattle closed $0.30 higher at $108.65, February live cattle closed $0.70 higher at $112.15 and April live cattle closed $0.75 higher at $116.05. Friday's cash cattle trade was relatively uneventful as the day posted some clean-up trade but nothing new or noteworthy in regard to prices. Friday's slaughter is estimated at 109,000 head, 5,000 head less than a week ago and 9,000 head less than a year ago. Saturday's kill is projected to be around 59,000 head.

For the week choice cuts averaged $211.03 (up $3.88 from a week ago) and select cuts averaged $196.51 (up $6.67 from a week ago) and the week's total movement of cuts, grinds and trim totaled 727 loads.

Boxed beef prices closed mixed: choice up $1.88 and select down $0.48 ($198.49) with a movement of 115 loads (59.96 loads of choice, 21.29 loads of select, 23.03 loads of trim and 10.85 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Higher. This year has been hell, but maybe November can be better for cattlemen? With boxed beef prices scaling higher and the cash cattle market bound to regain some leverage, next week's trade is already anticipated to be stronger.

FEEDER CATTLE:

The feeder cattle market closed mixed with nearby contracts rallying modestly into the day's close and deferred contracts facing resistance before the day's end. November feeder cattle closed $0.12 higher at $137.70, January feeder cattle closed $0.52 higher at $135.92 and March feeders closed $0.42 higher at $135.17. As Friday etched into the afternoon's trade, the support from the rallying live cattle futures and regression in the corn complex helped boost the feeder cattle market's confidence and allow for most of the contracts to trade higher into the weekend. Montana's Weekly Livestock Auction summary shared that, compared to a week ago, unweaned steer calves under 400 pounds sold $10.00 to $15.00 lower, steers weighing 400 to 599 pounds sold mostly steady to $5.00 higher and steers weighing 600 to 699 pounds sold steady to $5.00 lower. Unweaned heifer calves under 400 pounds sold steady to $5.00 lower, heifers weighing 400 to 649 pounds sold mostly steady to $3.00 higher and the heavier weighted heifers weren't well compared to last week's offering. Calves with two rounds of preconditioning shots continue to sell strong with $4.00 to $8.00 premiums. Receipts this week were relatively light even though the weather favored traveling conditions and the market traded stronger. Heading into next week's trade, monitoring how many calves are hitting the marketplace and how corn prices are trading will be key. The CME feeder cattle index for Nov. 5: down $1.28, $136.63.

LEAN HOGS:

The lean hog market is stuck trading in either a sideways pattern or is pushed lower as the market pushes the contracts away from resistance levels. The pork cutout value continues to trade in a choppy manner as higher and lower swings vary upon the day, but thankfully the industry continues to slaughter hogs at an impressive speed. December lean hogs closed $2.52 lower at $64.90, February lean hogs closed $1.45 lower at $67.02 and April lean hogs closed $0.10 lower at $70.42. Pork cutouts totaled 307.57 loads with 273.95 loads of pork cuts and 33.63 loads of trim. Pork cutout values: down $2.32, $84.06. Friday's slaughter is estimated at 488,000 head, 3,000 head more than a week ago and 4,000 head more than a year ago. Saturday's kill is projected to be around 260,000 head. The CME lean hog index for Nov. 4: down $0.53, $71.52.

MONDAY'S CASH HOG CALL: Steady. Moving forward, the cash hog market is going to really come down to managing two factors while the market corrects. Packers are vigorously processing hogs, which will push them to dip into the cash market from time to time, but with the hog market pressured to correct from recent highs, their ambition to support the cash market is slim. 

#completecalfcare

Friday Midday Livestock Market Summary - Cattle Rally into Afternoon

Rallying into the home stretch of the week, the livestock complex carries its momentum into the afternoon. Other than some stark resistance that is plaguing the nearby lean hog contracts, the entire livestock sector is trading higher. The cash cattle market hasn't been active as feedlots are adamant about getting $109 to $110, and packers aren't that in need of cattle. December corn is down 2 cents per bushel and December soybean meal is down $5.00. The Dow Jones Industrial Average is down 70.10 points and NASDAQ is down 27.10 points.

LIVE CATTLE

Even with a slight regression in the select cuts, the live cattle market is scaling higher as the complex has been fueled this week by stronger boxed beef prices and strengthening cash cattle prices. December live cattle are up $0.30 at $108.65, February live cattle are up $0.62 at $112.07 and April live cattle are up $0.72 at $116.02. The morning's cash cattle trade has been mostly idle as the week's business is most wrapped up other than some clean-up trade that could develop. There was a small sampling of cattle trade in Nebraska Friday morning for $167 with delivery for the week of 11/23/2020, and Iowa has seen bids renewed from $106 to $108.

Boxed beef prices are mixed: choice up $0.76 ($213.31) and select down $1.21 ($197.76) with a movement of 68 loads (35.83 loads of choice, 13.65 loads of select, 12.90 loads of trim and 5.95 loads of ground beef).

FEEDER CATTLE

Heading into the afternoon the feeder cattle market is trading modestly higher as corn prices fight some resistance. November feeder cattle are up $0.22 at $137.80, January feeder cattle are up $0.50 at $135.90 and March feeders are up $0.27 at $135.02. As the live cattle market has scaled higher throughout the week, the feeder cattle market is being fueled by the optimism throughout the cattle complex as cash cattle trade higher, the futures market is supported and the corn contracts are holding steady at this point in the day.

LEAN HOGS

The lean hog complex rallied throughout Thursday's trade but as the market is still pressured to trade lower; away from resistance, Friday's trade has pushed nearby contracts lower. December lean hogs are down $2.45 at $64.97, February lean hogs are down $1.02 at $67.45 and April lean hogs are down $0.15 at $70.37. As the day grows closer and closer to wrapping up the week, it wouldn't be surprising to see trade grow less and less interested as the market is correcting.

The projected lean hog index for 11/5/2020 is down $0.40 at $71.12, and the actual index for 11/4/2020 is down $0.53 at $71.52. Hog prices are lower on the National Direct Morning Hog Report, down $0.53 with a weighed average of $60.60, ranging from $56.00 to $62.67 on 3,848 head and a five-day rolling average of $60.03. Pork cutouts total 223.93 loads with 197.50 loads of pork cuts and 26.43 loads of trim. Pork cutout values: down $1.09, $85.29.

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Friday Morning Livestock Market Update - End-of-Week Buying Likely Across Complex

 General Comments:

Cash cattle trade has been slow to develop through the week, although a few sales have trickled into the market in both Northern and Southern cattle country. Prices have settled generally steady to $1 per cwt higher than last week live and as much as $4 per cwt higher dressed basis. Additional trade is expected to develop through the day Friday, but without a significant shift in futures trade or beef values, it is unlikely there will be additional upside cash cattle market moves before the end of the week. With the tone likely being set going into Friday morning, it is uncertain just how many additional cattle will be purchased, leaving the potential for another light list of cattle sold. Even though packers continue to focus on keeping packer schedules active, the aggressiveness in buying seems to have quickly changed over the last couple of weeks. Given the lack of aggressive packer interest for large amounts of cattle this week, feeders will have to face the dilemma once again of whether to let cattle go at current bids, or hold cattle for another week, with the hope and expectation that higher prices will develop later in the month. Futures trade continues to regain market support with live cattle futures expected to shift higher based on firming boxed beef values. Even though moderate-to-strong buyer support in live cattle trade continues, the aggressive gains in grain and feed prices has caused a pullback in feeder cattle futures, with higher production costs quickly eroding previous price support on cattle going into feedlots.

Lean hog futures continue to gain active buyer support as traders are steadily moving back into the market with additional funding not seen in the last couple of weeks. December lean hog futures have continued to distance themselves from recent lows and could use this movement to establish seasonal lows. Over the last two days, spot December lean hog futures have posted a $2 per cwt market rally, helping not only to set a firmer tone of the market, but to spark additional underlying buyer support. Strong gains developing in pork cutout values has not only renewed underlying buyer support on futures trade, but the fundamental support in the complex is regaining market momentum lost through the last half of October. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady to firm. Slaughter Friday is expected at 484,000 head. Saturday runs are expected at 261,000 head.

	BULL SIDE		BEAR SIDE
1)	Strong underlying support in boxed beef prices have continued to develop through the week. The move higher is helping to spark renewed optimism in the entire fed cattle complex, with the expectation that further meat price support is likely despite growing coronavirus numbers.	1)	Gains in steer carcass weights released in the "actual cattle slaughter" report Thursday sparked concerns of growing supplies. Steer weights moved to all-time highs at 931 pounds, increasing 2 pounds from the previous week.
2)	Spot December live cattle futures have posted an impressive $5 per cwt rally over the last two weeks. The ability to maintain this building market support during the next week is expected to stimulate additional price support through the holiday seasons.	2)	Cash cattle prices have been slow to develop and have not kept up with the active price support in futures and boxed beef values over the last two weeks. This is creating further distance between the markets and causing significant concern about the ability to move prices higher at the end of the year.
3)	Additional aggressive gains flooded into pork cutout values Thursday afternoon. The renewed momentum in pork prices has helped to create a more optimistic outlook heading into the Thanksgiving season.	3)	Cash hog values have been slow to react to the recent increases in pork prices and futures trade. This adds further concern that packers may start to become less aggressive in buying heading toward the end of year holidays.
4)	Triple-digit gains in nearby lean hog futures trade has stimulated additional commercial and noncommercial interest to actively step back into the complex. The focus on nearby contracts able to hold prices above $66 per cwt will be essential to spark renewed late week buyer interest.	4)	The outlook for active price gains through next summer seems less optimistic than it did over the past several weeks. Despite continuing a firm price premium in deferred futures, the concern of domestic and global demand growth over the next year seems to be limiting long-term buyer support.

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