Monday Midday Livestock Market Summary - Contracts Jump at Opportunity to Trade Higher

 GENERAL COMMENTS:

The livestock complex is seeing an easy $1.00 to $3.00 rally across all three markets Monday. The feeder cattle market is closely watching how much stronger the corn market grows as $0.02 to $0.05 gains are seen entering the afternoon. Monday morning saw some light cash cattle trade in Nebraska at steady prices with a week ago. December corn is up 2 3/4 cents per bushel and December soybean meal is up $2.30. The Dow Jones Industrial Average is up 182.14 points and NASDAQ is down 1.11 points.

LIVE CATTLE

The live cattle complex is liking Monday's attitude, which is regaining what was lost last week and is being encouraged by positive announcements about more COVID-19 vaccines and a bullish Cattle on Feed Report Friday. December live cattle are up $2.15 at $110.22, February live cattle are up $2.50 at $113.15 and April live cattle are up $2.30 at $116.75. There was some light cash cattle trade Monday morning in Nebraska at fully steady prices, but otherwise the countryside has only seen light inquiry from packers. Given that this week is shortened for the Thanksgiving holiday, cash cattle trade is expected to develop earlier in the week. Showlists are larger this week in all the 5-state feeding region.

Last week's negotiated cash cattle trade totaled 106,137 head. Of that 79,128 head are for delivery in the next two weeks while the remaining 27,009 head are for delivery in the following 15 to 30 days.

Boxed beef pries are mixed: choice up $4.09 ($242.44) and select down $0.45 ($214.53) with a movement of 54 loads (24.79 loads of choice, 11.91 loads of select, 5.35 loads of trim and 12.15 loads of ground beef).

FEEDER CATTLE:

Feeder cattle prices are regaining what was lost late last week as the market rallies $2.50 to $3.00. January feeders are up $3.10 at $137.00, March feeders are up $2.90 at $137.27 and April feeders are up $2.77 at $138.95. So long as the corn market rally doesn't continue to soar into Monday afternoon, the feeder cattle market should be able to capitalize on gains all throughout the day.

LEAN HOGS:

Lean hog futures haven't seen much action over the last month as the market is developing a low, but Monday's excitement has even trickled over into the hog market and is helping rally nearby contracts $1.00 to $2.00 higher. December lean hogs are up $1.37 at $65.50, February lean hogs are up $2.22 at $67.57 and April lean hogs are up $2.27 at $70.47. What could potentially help the hog market is long-term strength in the pork cutout value, as the market has endured fluctuations in hog prices in the latter part of 2020.

The projected lean hog index for 11/20/2020 is down $0.31 at $67.83 and the actual index for 11/19/2020 is down $0.63 at $68.14. Hog prices are lower on the National Direct Afternoon Hog Report, down $1.02 with weighted average of $57.81, ranging from $50.00 to $59.00 on 4,760 head and a 5-day rolling average of $58.34. Pork cutouts total 280.08 loads with 261.03 loads of pork cuts and 19.04 loads of trim. Pork cutout values: up $0.78, $78.95.

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Monday Morning Livestock Market Update - Slight Optimism Likely Following Cattle on Feed Report

 General Comments:

Following mostly steady cash cattle prices last week, packers and feeders are expected to slowly enter the holiday week with uncertainty as to how many cattle will be traded through the shortened week. Although most cattle were reported to be sold at steady money with last week's price levels at $110 live and $172 per cwt, it will be interesting to see the weekly averages when they are released Monday due to reported ranges expanding through the end of last week ($108-$110 live and $166 to $172 dressed). Active cash market activity is not expected until late Tuesday or Wednesday, but with plants dark Thursday for Thanksgiving, it is likely that both sides will get at least a good start on needed cash sales by the end of the day Wednesday. This could lead to an odd week of cash market trade, and potentially some moderate price shifts for the last full week of November. Futures trade is expected mixed to mostly higher as traders have the first chance to trade the Cattle on Feed report. With report totals not moving significantly from pre-report estimates, wide market shifts in price direction are not expected, but the opportunity to regain limited buyer support and push prices higher following the weekend break could lead to additional market volatility. With a holiday-shortened week, trade volume is expected to remain limited in not only cattle futures, but all markets. This is the wildcard of the market going into the week as the limited trade could bring about even more price volatility in the coming weeks.

Lean hog futures quickly bounced back Friday afternoon with triple-digit losses essentially offsetting previous losses. The active buyer support had little to do with significant change in direction of the market at the end of the week, but more focus on the fact that the pork complex continues to be undervalued and concerns of significant demand erosion may have been overplayed. February and April futures closed Friday with gains above $2 per cwt, creating a stronger base on which traders can rest as prices have bounced back above Thursday's support levels. Increased market shifts are expected over the next week, although holiday-shortened trade will likely keep many traders on the sidelines. The lack of trade volume has the potential to spark moderate-to-wide market swings in either direction as traders are likely to be heavily influenced by outside market direction with less focus on hog market fundamentals. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady 50 cents lower. Slaughter Monday is expected at 492,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle on feed totals, and cattle placement levels came in below estimates, which is expected to create slight-to-moderate market support during early trade.	1)	Cattle on feed numbers remain at 12 million head, even though below pre-report estimates, is still considered negative given the abundant supply levels plaguing the cattle industry over the next few months.
2)	Continued strong gains to develop in boxed beef markets, further adding buyer support and the expectations for higher asking prices for cash cattle through Thanksgiving week.	2)	Holiday limited schedules at packing plants and shortened trading during the week could limit aggressive cash market activity in many areas. Weaker cash cattle trade could signal a significant change in market direction through the end of the year.
3)	Cash hog prices bounced higher late last week as the previous market pressure seems to have eroded the ability for packers to access hogs at significant discounts. The higher prices could spark renewed interest through the end of November.	3)	Pork cutout values continue to shift higher and lower in a wild market swing. This is limiting confidence in the complex as traders seem to have little indication as to the long-term direction of pork values over the next several weeks.
4)	Aggressive triple-digit gains Friday afternoon quickly offset the previous day's losses and sparked active buyer support as traders moved back into the market and prices bounced off support price levels. This could create momentum for nearby hog futures over the next couple of days.	4)	Growing concerns of China's pork-buying role over the coming months as pork prices in China are falling. Domestic production continues to rebound in the country, which could further pressure U.S. pork prices.

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Friday Closing Livestock Market Summary - Live Cattle Higher With Eye Toward Cattle on Feed Report

 GENERAL COMMENTS:

Live cattle futures traders took the deferred 2021 contracts higher by the end of Friday's session in anticipation of the monthly Cattle On Feed report, which did indeed come in with neutral-to-bullish numbers: 1% more animals on feed than a year ago. Lean hog futures were also higher through Friday afternoon's trade with stiff enough gains to erase most of the week's previous volatile losses. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.33 with a weighted average of $58.73 on 4,961 head. December corn closed up 3/4 cents per bushel and December soybean meal closed up $1 per ton. The Dow Jones Industrial Average is down 219.75 points and NASDAQ is down 78.99 points.

From Friday to Friday, livestock futures scored the following changes: December live cattle off $1.82, February live cattle off $1.57, January feeder cattle off $3.28, March feeder cattle off $2.78, December lean hogs off $0.78, February lean hogs up $0.77.

LIVE CATTLE:

Live cattle futures traders will come in Monday morning generally pleased with the futures buying activity they undertook Friday afternoon in anticipation of the November Cattle on Feed report. The U.S. cattle inventory has been running at record-large numbers, and at 12.0 million head on Nov. 1, that trend continues. The number was only 1% higher than the year-ago figure and at the low end of pre-report estimates. October placements at 2.19 million head were 11% less than last year's huge October figure, and October marketings at 1.87 million head were slightly below last October. From a pure numbers perspective, the fed cattle market should feel well supplied, but given that many of the cattle currently on feed came in at relatively low weights due to drought stress, the outlook for availability in the next three to six months might require some adjustment. At Friday's close, the December contract was down $0.15 at $108.10, the February contract closed up $0.125 at $110.65, and the April contract closed up $0.25 at $114.45. Asking prices for cattle left on showlists Friday afternoon are around $110 plus in the South and $174 plus in the North, steady with last week.

Friday's slaughter was seen at 115,000 head -- 3,000 fewer than last week and 1,000 fewer than a year ago. Add 72,000 head from the expected Saturday slaughter for a weekly figure of 665,000 head, which is 12,000 more than last week but 3,000 fewer than the comparable week last year. 

Boxed beef prices were higher: choice up $0.65 ($238.35) and select up $1.09 ($214.98).

MONDAY'S CASH CATTLE CALL: Steady. Although Monday's activity is likely to be limited to the collection of showlists, seasonal expectations could keep asking prices firm.

FEEDER CATTLE:

Feeder cattle futures couldn't shake the steeply lower trend that has taken over its charts since hitting last week's high. The January contract closed Friday down $0.95 at $134.60, the March contract was down $0.575 at $134.375, and the April contract closed down $0.40 at $136.175. However, this hasn't seemed to affect the moods of order buyers out in the country. Burwell, Nebraska, had a big sale Friday (1,850 head of all feeder cattle) that experienced good demand and resulted in 600 lb steers selling $3 higher ($152.62) and 500 lb heifers selling $6 higher ($153.10) than their values from the previous sale two weeks ago. The November feeder cattle futures contract settled Friday at $136.75. The CME Feeder Index for 11/18 came to $137.51 per cwt and has been holding steady above $137 all week.

LEAN HOGS:

Friday saw higher daily trading volume than in most recent futures trading sessions, and once that activity showed up, it helped the market recover and pull deferred contracts into small weekly gains. For the day, the December contract closed up $0.425 at $64.125, the February contract closed up $2.30 at $65.35, and the April contract closed up $2.00 at $68.225.

Through most of the week, the spread between hogs and pork had been widening in packers' favor, with a series of lower hog bids and generally stronger cutout values. But on Friday that trend finally halted, with some mild gains in purchased hog prices (up $0.33 to a $58.73 weighted average). Pork cutout values: down $1.05, $78.17. Hams have had the most volatility this week, but butt prices down $6.32 Friday also contributed to the carcass weakness. Pork cutouts total 391.36 loads with 342.18 loads of pork cuts and 49.19 loads of trim. Friday's slaughter was seen at 485,000 head -- 8,000 more than a week ago and 3,000 fewer than a year ago. Saturday is expected to be a big day, with 277,000 head slaughtered, bringing the weekly figure to 2,711,000 -- 28,000 more than last week but 56,000 fewer than the comparable pre-Thanksgiving week last year. The CME lean hog index for 11/18: down $0.55 at $68.77, and the DTN projected CME lean hog index for 11/19: down $0.63 at $68.14.

MONDAY'S CASH HOG CALL: Higher. Losses have been overdone in hog prices and some recovery may be expected.

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Friday Midday Livestock Market Summary - Hogs Higher, Cattle Lower

 GENERAL COMMENTS:

Lean hog futures have recovered somewhat from Thursday's accelerated drop, but live cattle and feeder cattle futures are continuing their losses despite relatively firm indications from cash business in the country. Trade volume may pick up and shift the tone for live cattle futures as the Friday afternoon Cattle on Feed report approaches. December corn is up 1 1/4 cents per bushel and December soybean meal is up $0.50. The Dow Jones Industrial Average is down 179.41 points and NASDAQ is down 1.12 points.

LIVE CATTLE:

The December live cattle contract is down $0.575 at $107.675, the February contract is down $0.375 at $110.15 and the April contract is down $0.175 at $114.025. Cash cattle traders have so far remained quiet Friday and they may continue to drag their feet until after the Cattle on Feed report gets released Friday afternoon. The report is expected to show anywhere from a 0.9% to a 2.6% year-over-year increase in the Nov. 1 inventory (average analyst estimate at 1.8% increase). It's also expected to show anywhere from a 12.7% to a 4.5% year-over-year drop in October placements (average analyst estimate at 90.8% of last year's number), but this isn't necessarily as bullish as it sounds given how large the October 2019 placements were. Bullish interpretation could still be given to any of the numbers in this month's report, once discounted for the lighter weights of the animals coming into lots after the persistent drought across the High Plains and Southwest. 

Boxed beef prices are mixed: choice up $0.80 ($238.50) and select down $0.12 ($213.77) with a movement of 60 loads (31.67 loads of choice, 12.15 loads of select, 7.71 loads of trim and 8.4 loads of ground beef).

FEEDER CATTLE:

The January feeder cattle futures contract, now the front-month contract, has continued its downward slide Friday and, by dipping as low as $133 per cwt at one point in the morning, given back all the gains it had once made during the month of November. Futures trade volume has been relatively deep so far during this session, so the losses can't even be blamed on poor liquidity. At midday, that January contract is down $1.175 at $134.375, the March contract is down $0.65 at $134.30, and the April contract is down $0.45 at $136.125.

LEAN HOGS:

It has been a volatile week in outside markets with the day-by-day prospects of a good vaccine (for humans, not swine) to prevent coronavirus cases and economic lockdowns being weighed by the various markets, leaving lean hog traders to respond. Thursday's steep losses left a buying opportunity for traders who judge hogs should stay above $64 per cwt through the end of 2020, and their buying interest has pulled lean hog contracts into across-the-board gains. The December contract is up $0.80 at $64.50, February is up $2.65 at $65.70, and April is up $2.45 at $68.675. The projected lean hog index for 11/19/2020 is down $0.63 at $68.14 and the actual index for 11/18/2020 was down $0.55 at $68.77. Hog prices are higher on the National Direct Morning Hog Report, up $0.08 with a weighted average of $58.48, ranging from $50.00 to $58.99 on 3,406 head and a five-day rolling average of $58.76. Pork cutouts total 229.13 loads with 198.80 loads of pork cuts and 30.34 loads of trim. Pork cutout values: down $0.35, $78.87.

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