DTN Before The Bell Livestock

Morning Trade Quiet as Expected

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

GENERAL COMMENTS:

Limited trade is seen in livestock futures with narrowly mixed prices seen across the complex. There will continue to be some focus on cash cattle trade developing, but this could be after the early market close in futures trade, leaving Monday's market activity more important as it will account for end-of-month positioning. Corn is higher in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 98 points higher with NASDAQ up 90 points.

LIVE CATTLE:

Open: Mixed. Narrow trading ranges have developed early Friday morning, which is not unusual or unexpected in the short trading session after the Thanksgiving holiday. Markets will close early, although most traders have already exited the market Wednesday or earlier and are not likely to show interest until early next week. The potential for light market interest to spark volatile price swings exists, but most likely markets will wander within a narrow range through the rest of the week. Cash cattle activity still remains at a standstill early Friday morning with bids still quiet, although asking prices remain elevated as feeders try to take advantage of the midweek cash market support and gains in futures and boxed beef prices. Given the limited amount of trade seen Wednesday, it is likely that at least light trade should be seen Friday. But the day after Thanksgiving is usually unpredictable given the limited amount of interest in both cash and futures markets through the holiday weekend. Given the underlying market conditions, further cash market support is very possible, but it is still uncertain how many more cattle packers need to acquire before the end of the week or month. Export sales for last week were extremely disappointing with negative overall sales seen in several markets. The developing cancelations of sales was led with a decrease of 15,500 metric tons (mt) overall as South Korea posted greatest single country shift of 10,800 mt in reductions. Given the limited trade, it is likely this will not have widespread short-term implications, but it could create longer-term concerns about overall beef movement. Open interest slipped 249 positions (275,544). December contracts lost 1,300 positions (24,197) and February contracts fell 455 positions (111,523). DTN projected slaughter for Friday is 114,000 head.

FEEDER CATTLE:

Open: Steady to 20 cents higher. Market activity remains at a near standstill Friday morning, which is expected for a holiday-shortened day of trade. The ability to take advantage of the strong pre-holiday gains is allowing for follow-through buying with no significant resistance moving into the market. This could keep prices slightly elevated, but market direction or major price shifts are not likely within the next few hours. Traders are likely to coast into the weekend, willing to wait until Monday before focusing on end-of-month positioning. Cash index for 11/24 is $137.30, up 0.18. Open interest Wednesday added 255 positions (37,412).

LEAN HOGS:

Open: Mixed. Limited activity is seen early Friday morning. Not only are livestock traders increasingly absent from the market during the holiday week, but the early market close Friday is likely to keep most other traders on the sidelines through much of the morning. Narrow to moderate losses in nearby contracts are adjusting from pre-holiday gains, although no significant shift is likely in market direction during the day. Weekly pork exports totaled 18,800 mo, with the largest purchaser being Mexico. The overall lack of movement during late November may add further concerns about the ability to actively move pork into the world market over the coming months. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest fell 413 positions (201,151). December fell 2,313 positions (21,651) and February gained 612 positions (82,425). Cash lean index for 11/23 is $67.70, down 0.13. DTN projected slaughter for Friday is 488,000 head. Saturday runs are expected at 376,000 head.

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

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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Rick Kment