Tuesday Morning Livestock Market Summary - Further Short-Covering May Unfold

 General Comments:

As anticipated, the cattle complex was able to shrug off the bearish Cattle on Feed report for the most part Monday. Feeder cattle showed nice gains and held most of it while live cattle slipped back from good gains to close mixed. One could say the bearishness of the report has already been factored in. Neither packers nor feedlots tipped their hand Monday, deciding to wait until Tuesday to see if anyone will blink. It is likely packers will open with bids lower than last week unless greater strength is seen for boxed beef and higher futures unfold. There is not much hope for either one right now. It is unlikely any business will take place Tuesday in the country. The Commitment of Traders report showed funds still net-long 34,941 contracts after some serious liquidation the previous week.

Lean hogs made a nice rebound Monday possibly signaling a change in trader sentiment. However, it takes more than a day or two before a bottom can be confirmed technically. Cutout values continue to suffer with increased competition from other meats. China concerns still float around the market and will continue to be a topic of discussion, but lower-than-expected imports from them is a ways in the future and should not impact current trading. The market has corrected more than enough technically but may struggle to resume the uptrend. The Commitment of Traders showed funds net-long 42,058 contracts, indicating a bullish attitude.

	BULL SIDE		BEAR SIDE
1)	Cattle futures were able to perform well considering the bearish implications of the Cattle on Feed report. The negatives may already be factored in allowing for the market to rebound.	1)	Cattle weights are higher and will put more beef on the market as slaughter increases. It may be difficult to absorb the extra product through the end of the year.
2)	The market is oversold technically, which could trigger short-covering and a price correction. A price increase could give feedlots the confidence to hold for higher cash prices this week.	2)	The inability of the market to follow-through Monday to the upside may indicate the market is correcting from being oversold, but it may not have enough support to push futures higher. Futures establish a lower low initially.
3)	China is rebuilding their hog herd, but it will still take time to fully accomplish that task. In the meantime, they will continue to import pork, which should provide support to prices into next year.	3)	Pork prices have declined enough to increase the interest of packers, but that interest might be confined to steady-to-lower bids.
4)	Hog futures are oversold and the price reversal Monday may indicate buyer interest has returned.	4)	Concern over exports to China slowing next year continues to be a cloud hanging over 2021 futures contracts. The price bounce Monday may be short-lived as the market grapples with current supply and futures demand.

#completeherdhealth

Monday Closing Livestock Market Summary - Contracts Close Mostly Higher

Following last week's brutal trade throughout the livestock complex, it was a pleasure seeing all three markets close mostly higher, even it was just for minor gains. Traders seemed slightly more willing to dabble in the livestock contracts, which helped to keep Monday's trade elevated through closing. Hog prices closed higher on the National Direct Afternoon Hog Report, up $3.59 with a weighted average of $62.30 on 5,008 head. December corn is down 1 1/2 cents per bushel and December soybean meal is up $3.20. The Dow Jones Industrial Average is down 650.19 points and NASDAQ is down 189.34 points.

LIVE CATTLE:

Except for a couple of nearby contracts that closed only mildly lower, the live cattle market closed mostly higher. December live cattle closed $0.17 lower at $103.40, February live cattle closed $0.22 lower at $106.40 and April live cattle closed $0.22 higher at $106.40. The market's buy-in from traders is still relatively weak considering how much ground was lost last week, and to move the market substantially higher, full support will be needed given the bearish fundamentals. Monday's cash cattle trade was a typical Monday as merely no action was seen. Asking prices have yet to be established and packers weren't overly interested about shopping around this early in the week. Monday's slaughter is estimated at 118,000 head, steady with a week ago and 2,000 head more than a year ago.

Boxed beef prices closed mixed: choice up $0.34 ($207.83) and select down $2.91 ($188.49) with a movement of 135 loads (60.80 loads of choice, 44.49 loads of select, 18.59 loads of trim and 11.49 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Steady at best. This week's market could easily fall lower if bears have their way, but if bulls rally and unite feeders together, the market could trade at least steady. Unless boxed beef prices turn around, it's going to be hard to talk packers out of much as they are seeing some pressure from retail sales.

FEEDER CATTLE:

Feeder cattle contracts secured a higher close for Monday's trade and thoroughly enjoyed seeing the minor break in the corn market's rally. November feeders closed $0.92 higher at $130.57, January feeders closed $1.22 higher at $126.77 and March feeders closed $0.92 higher at $126.45. The market's rally will be tested throughout the rest of the week as the market's bearish favors haven't disappeared. At Joplin Regional Stockyards in Carthage, Missouri, compared to a week ago, steer and heifer calves were $2.00 to $5.00 lower and yearlings were steady to $5.00 lower. The biggest difference though was the supply that was tested in Monday's market after seeing last week's weakness throughout the entire marketplace. Cattlemen saw the lack of demand for calves and offered fewer in Monday's sale. The CME feeder cattle index for Oct. 23: down $0.31, $133.70.

LEAN HOGS:

The lean hog market rallied into the afternoon and closed fully higher, fueled by a strong cash market. December lean hogs closed $0.72 higher at $67.75, February lean hogs closed $0.72 higher at $67.65 and April lean hogs closed $0.35 higher at $70.07. Even though midday cutout values were stronger, the market closed with a weaker cutout value, but with the market's other rally facets, the negative close didn't affect the market's morale. Helping cash hog prices is the fact that packers are clipping through hogs at a vigorous pace, pressuring year ago speeds and running at full capacity. Pork cutouts totaled 305.16 loads with 271.02 loads of pork cuts and 34.14 loads of trim. Pork cutout values: down $1.39, $91.86. Monday's slaughter is estimated at 492,000 head, 15,000 head more than a week ago and 1,000 head more than a year ago. Saturday's hog slaughter was revised to 237,000 head. The CME lean hog index for Oct. 22: down $0.06, $78.54.

TUESDAY'S CASH HOG CALL: Steady. With the combination of packers' aggression Monday afternoon and the board's higher close, steady prices could be obtained.

#completecalfcare

Monday Midday Livestock Market Summary - Contracts Seeing Some Support

 General Comments

Looking toward the afternoon the live cattle complex is trading mostly higher following last week's depressing trade. The lean hog market has changed from trading solidly lower earlier in the day to rallying modestly. The feeder cattle market is keeping its upward progression and though most of the live cattle market is doing the same -- some nearby contracts are facing pressure. December corn is down 1 1/2 cents per bushel and December soybean meal is down $1.90. The Dow Jones Industrial Average is down 741.71 points and NASDAQ is down 196.24 points.

LIVE CATTLE

It's somewhat surprising to see live cattle contracts higher after last week's disappointing trade and Friday's bearish Cattle on Feed Report. Nearby contracts are trading lower, but the rest of the marketplace is trading slightly higher. December live cattle are up $0.82 at $102.75, February live cattle are down $1.00 at $105.62 and April live cattle are down $0.35 at $108.92. Thankfully the cash cattle market hasn't begun to test the waters yet this week and midday bids and asking prices are still elusive. New showlists appear to be about steady in Texas, and higher in Kansas and Nebraska/Colorado.

Last week's negotiated trade totaled 93,159 head. Of that 65,109 head are for delivery in the next two weeks while the remaining 28,050 head will be for the following 15 to 30 days.

Boxed beef prices are lower: choice down $0.95 ($206.54) and select down $2.59 ($188.81) with a movement of 59 loads (23.42 loads of choice, 18.39 loads of select, 12.55 loads of trim and 4.34 loads of ground beef).

FEEDER CATTLE

Even though the corn market is only falling a mere $0.01 to $0.02 lower, it's a sweet, SWEET sight for the feeder cattle contracts. Following last week's plunge lower, the market is seeing modest support thus far through Monday's trade. November feeder cattle are up $0.27 at $129.92, January feeder cattle are up $0.70 at $126.25 and March feeders are up $0.55 at $126.07. Last week throughout the country steers and heifers sold anywhere from $4.00 to $8.00 lower as ample supplies of calves outweigh current demand and the boards uncertainty concerned buyers. Following last week's softer prices and the moisture that accumulated late last week - this week's run of calves could be lighter as cow/calf producers are carefully watching the market.

LEAN HOGS

Stepping into the new week the lean hog market wasn't confident how traders would approach the market but as the morning warmed up interest grew and trader support developed. December lean hogs are down $0.05 at $66.97, February lean hogs are up $0.05 at $66.97 and April lean hogs are up $0.15 at $69.87. Again, Monday's pork cutout value scaled higher and helped bring some confidence into the marketplace.

The projected lean hog index for 10/22/2020 is down $0.06 at $78.54 and the index for 10/21/2020 is down $0.09 at $78.60. Hog prices are unable on the National Direct Day Hog Report due to packer submission problems. Pork cutouts total 125.31 loads with 104.34 loads of pork cuts and 20.98 loads of trim. Pork cutout values: up $2.99, $96.24.

#completeherdhealth

Monday Morning Livestock Market Summary - Mixed Trade Expected

 General Comments:

All good things come to an end and this certainly was the case with cattle over the past two weeks. After enjoying a period of nice high prices, the bottom fell out of the market with futures falling back to levels last seen in June. Unfortunately, the bottom may not have been found. The Cattle on Feed report did little to provide any support as continued large numbers remain. In fact, the inventory of cattle on Oct. 1 of 11.7 million head was the largest on record since information began being gathered in 1996. Cattle weights are also near record highs for this time of year, which is adding to the available tonnage of meat moving toward the end of the year. A positive aspect is that the Cold Storage report released last Thursday was somewhat neutral, indicating good demand is evident. Futures are oversold, but the bearish report Friday may keep it there longer.

Hog futures have now corrected an overbought market and may be ready to resume the uptrend that may have begun on Friday or at least found a level of support. Despite the rapidly expanding hog herd in China, demand has done well. December futures have been the recipient of the good demand while later futures contracts have reacted to the strong potential of slowing exports. The September Cold Storage report was friendly to some aspect of the market, but overall, it will need a bullish injection of news to provide further support. Hog contracts for 2021 are hugely oversold but may remain that way for a while.

	BULL SIDE		BEAR SIDE
1)	There is a strong possibility cattle futures have more than factored in the bearish Cattle on Feed report, which could result in higher futures. Livestock futures have a track record of moving in the opposite direction of a report.	1)	The bearish Cattle on Feed report may keep the downtrend intact. Packers are expected to begin the week with lower bids, seeing the amount of beef that will be coming to the market as well as continued weakness of futures.
2)	Cattle futures are oversold and ripe for a price bounce. Sellers may take profits now that the numbers of the Cattle on Feed report are known.	2)	Beef demand from the food service industry will continue to struggle especially in light of the resurgence of COVID-19 cases across the country. This may negatively impact boxed beef prices.
3)	Hogs should find support from a friendly Cold Storage report and the fact that it will take some time for China to rebuild its hog herd. This could be supported by expected strong demand through the end of the year.	3)	The strength of December futures compared to 2021 hog contracts indicates strong demand now, but greater bearishness next year. China is expected to import less pork as their herd increases.
4)	Futures are oversold and ready for a technical bounce, which may have begun on Friday.	4)	Technically, there is a gap in the price charts that will likely be filled before the sell-off will be complete. Those gaps are around another dollar lower.

#completeherdhealth