DTN Before The Bell Livestock

Livestock Starting Lower On Veterans Day

December cattle and December hogs were both lower early Wednesday, waiting to see if the cash cattle trade can build on last week's encouraging performance. As we honor our veterans, outside markets are leaning slightly bullish for commodity prices early Wednesday. Dow Jones futures are trading up 76 points and the December U.S. dollar index is up 0.36. December gold is down $17.20 and December crude oil is up $1.25 a barrel.

LIVE CATTLE:

Open: 15 cents lower. December cattle are trading down 47 cents early Wednesday, hanging on to this week's gains, while traders wait for cash trade to develop. Slaughter remains active and was estimated at 120,000 Tuesday, even with a year ago. Dow Jones estimates 115,000 cattle ready for slaughter on Veterans Day, down from 118,967 a year ago. Cash trade has yet to develop this week, but the market is optimistic after seeing last week's higher prices and higher volume of negotiated trades reach 124,710. Tuesday's boxed beef price of $222.25 for choice cuts was up nearly $8.00 from Friday. Selects were priced at $208.55, up more than $10.00 since Friday and both are a sign of stronger retail interest. Technically, the correction in December live cattle appears to be over and prices are close to challenging the August high of $114.02. Prices are also back above the 100-day average at $109.25. Total open interest was down 2,446 at 273,224 on Tuesday's steady trade. December contracts were down 10,316 at 63,421 and February contracts were up 5,990 at 88,517.

FEEDER CATTLE:

Open: Steady. January feeder cattle are down 77 cents early, but still holding on to a positive gain for the week and staying above the 100-day average at $138.40. With a few exceptions, conditions have been mostly favorable for livestock this fall. The seven-day forecast remains dry for the western U.S. Plains and warmer temperatures are expected to return this week. The Feeder Cash index is listed at $135.85 for Nov. 9, down $2.18 from a week ago. From a technical viewpoint, January feeder cattle have had an impressive rebound from the October low and are back above the 100-day average again. Coronavirus concerns still weigh on livestock prices as infections hit news highs in the U.S. However, recent positive news from vaccine candidates have helped ease the longer-term mood and we started seeing a rebound in spring prices. Total open interest was down 1,374 at 35,884 on Tuesday's lower trade. November contracts were down 263 at 2,192 and January contracts were down 1,045 at 20,053.

LEAN HOGS:

Open: 2 cents lower. December hogs are down 87 cents early Wednesday, challenging the recent low near $64.00 as noncommercial bulls appear to be losing enthusiasm. The October high of $72.80 remains unchallenged and will probably stand as the peak of the fourth quarter. Formula prices have been holding steady near $70 lately and show no strong inclination to move much in either direction. CME's Lean Hog Index was at $71.25 on Nov. 9, roughly $6 above the December contract. The index has been slowly sliding lower and carcass values are also down from a brief October venture above $100. On Tuesday, pork carcass was reported at $82.98, down $1.08 since Friday. Tuesday's hog slaughter was estimated at 493,000, even with a year ago. Dow Jones estimates 454,000 to be slaughtered on Veterans Day, down from 493,399 a year ago. Tuesday's packer margin was $41.54 per head, a comfortable margin that keeps packers buying. Total open interest was down 2,133 at 206,216 on Tuesday's lower trade. Open interest in the December contract was down 9,170 at 52,264 while February contracts were up 5,587 at 63,664.

With thanks to our veterans for their service.

Todd Hultman can be reached at Todd.Hultman@dtn.com

(c) Copyright 2020 DTN, LLC. All rights reserved.