DTN Before The Bell Livestock

GENERAL COMMENTS:

Traders are quickly moving into all livestock markets Monday morning following the lighter-than-expected Cattle on Feed report numbers. Feeder cattle prices are leading the way higher with nearby futures holding gains above $2 per cwt. Hog futures are showing firm follow-through buying as traders piggybacked on Friday's market shift. Corn is higher in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 263 points higher with NASDAQ up 71 points.

LIVE CATTLE:

Open: 75 cents to $1.20 higher. Firm post-report gains have quickly moved into all live cattle futures with the momentum in feeder cattle trade the main focus. Although November Cattle on Feed numbers are at 12 million head (due to rounding), the fact that overall cattle in feedlots are slightly below expected levels is causing traders to become slightly more optimistic. This may add even more price support to the complex during early December following continued support in boxed beef prices. Cash cattle interest remains quiet Monday morning following generally steady trade last week. Packers will be looking to fill orders for the first couple weeks of December, but the holiday schedule may limit overall trade activity most of the week. Showlist distribution and inventory taking will occupy both parties most of Monday, but expect more interest Tuesday and Wednesday, compared to a normal weekly schedule. Both sides would like to wrap up trade by Wednesday evening in order to not have to return Friday after the Thanksgiving break. Open interest added 1,291 positions (276,341). December contracts lost 2,061 positions (29,905) and February contracts added 1,936 positions (110,098). DTN projected slaughter for Monday is 120,000 head.

FEEDER CATTLE:

Open: $1.50 to $2.50 higher. Feeder cattle futures have gained the most momentum from Friday's Cattle on Feed report with actual placement numbers falling short of estimates. Even though a huge placement number was posted, the fact that placements fell significantly from year ago levels helped sustain buyer confidence early Monday morning. It is uncertain just how much additional support will develop in feeder cattle through the holiday week given the concern of higher feed prices and uncertain long-term outlook for beef demand through the upcoming months. Cash index for 11/19 is $136.75, down 0.76. Open interest Friday added 269 positions (37,476).

LEAN HOGS:

Open: $1 to $2 higher. Strong follow-through buying is aggressively moving into lean hog futures following significant losses last week. The 2-day market rally has accounted for a $3 to $3.70 per cwt gain in nearby contracts, with spot December contracts moving back above $65 per cwt. The concern about volatile pork demand through upcoming weeks is likely to keep traders on edge and prices moving in a wild and crazy pattern over the next couple of weeks. Limited holiday week trade may add some increased momentum to the market, which currently is making up for the previous weakness in the market. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest added 851 positions (202,470). December fell 1,515 positions (27,960) and February gained 2,029 positions (80,301). Cash lean index for 11/19 is $68.14, down 0.63. DTN projected slaughter for Monday is 484,000 head. Saturday runs are expected at 385,000 head.

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

Editor's Note: See DTN Livestock Analyst ShayLe Stewart's complete 2021 market outlook live by attending the DTN Ag Summit, Dec. 7-9. This year's event is virtual, and as a DTN subscriber you can attend for FREE. Our premier farmer and rancher event features markets updates from ShayLe, DTN Lead Analyst Todd Hultman and a weather outlook by Senior Ag Meteorologist Bryce Anderson. Other speakers include: U.S. Ambassador Kip Tom; Ken Eriksen and Paul Hughes of IHS Markit; Microsoft Chief Scientist Ranveer Chandra; personal development speakers David Horsager and Jon Gordon; farmers Reid and Heather Thompson; farm blogger Meredith Bernard, and many more.

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