DTN Before The Bell Livestock

Livestock Futures Surge Higher on Outside Market Support

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)

GENERAL COMMENTS:

Sharp triple-digit gains have quickly moved into livestock trade following support in nearly all commodity and stock markets Monday morning. The focus on potential positive vaccine news sparked market optimism, although there still remains a lot of uncertainty about the growing direction of covid cases and overall management over the near future. Corn is trading higher in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 1,386 points higher with NASDAQ up 87 points.

LIVE CATTLE:

Open: $1 to $2 higher. Sharp gains have quickly flooded the live cattle complex. This move has pushed spot December futures back above $110 per cwt, helping to stimulate follow through buyer support which has quickly backed away from the market over the last week. Cash markets are undeveloped with show list distribution and inventory taking the main order of business. At this point cattle have yet to be priced, and depending on the ability for live cattle to hold early gains could make a significant impact on the direction of cash cattle trade by the end of the week. Open interest added 3,288 positions (279,921). December contracts lost 3,072 positions (92,045) and February contracts added 3,999 positions (74,759). DTN projected slaughter for Monday is 118,000 head.

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FEEDER CATTLE:

Open: $1 to $2 higher. Sharp gains quickly developed in all livestock trade, with feeder cattle not disappointing with aggressive early gains. Even though gains in grain trade was not enough to offset the optimism flooding into livestock trade. Little has changed fundamentally at this point, but aggressive support in outside markets has created additional underlying support through the entire complex. The increased daily trading limits are not yet being tested, but the aggressive support through the entire market could quickly spark follow through buying Monday. Cash index for 11/4 is $137.91, down 0.66. Open interest Thursday fell 505 positions (39,511).

LEAN HOGS:

Open: $1 to $2 higher. Early support has quickly moved into all livestock trade, with lean hog futures regaining Friday's losses, as buyer momentum seen at opening bell appears to hold. It is uncertain just how long the current market surge will develop, although the optimism has limited selling pressure in all contracts Monday morning. Traders will still have to deal with the uncertainty of pork value moves seen over the last couple of weeks, which could limit upside market potential through the next several days. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to weak. Open interest added 6 positions (215,877). December fell 1,785 positions (74,386) and February gained 1,518 positions (55,240). Cash lean index for 11/4 is $71.52, down 0.53. DTN projected slaughter for Monday is 490,000 head.

Rick Kment can be reached at rick.kment@dtn.com

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Rick Kment