DTN Before The Bell Livestock

Feeder Cattle Gains Lead Complex Higher

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

GENERAL COMMENTS:

Active buying in feeder cattle futures has sparked renewed interest across the entire cattle complex. This is putting more focus on the continued market rally in nearby feeder cattle charts as traders hone in on August highs, and the potential to move away from pandemic market pressure. Live cattle buying has become much more active Tuesday with traders looking for additional support as the day continues. Corn is trading steady to higher in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 322 points higher with NASDAQ up 108 points.

LIVE CATTLE:

Open: Steady to $1 higher. Early gains have tried to keep up with active buying support in feeder cattle futures Tuesday morning. Gains are scattered through the complex, although there continues to be increased efforts to focus on spring 2021 contract months that would focus tighter cattle supplies and hopes that additional beef demand growth will continue to develop over the coming months. April futures continue to hold a $7 per cwt premium to the spot December contract, creating potential for further widespread market interest developing over the next few trading sessions. Cash cattle markets still remain quiet with bids and asking prices not fully developed. Bids may not be seen until midweek or later, although cattle are starting to be priced around $112 to $113 live in the South, but still hard to pin down in the North on a dressed basis. Open interest added 583 positions (275,544). December contracts lost 842 positions (24,197) and February contracts fell 477 positions (111,523). DTN projected slaughter for Tuesday is 121,000 head.

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FEEDER CATTLE:

Open: $1 to $2 higher. Active buying is once again developing in feeder cattle futures following setting technical buy signals Monday afternoon. The underlying support redeveloping in all nearby feeder cattle trade is helping to regain market support as have now taken out September resistance levels and are aiming at August highs. A move above $146.42 in January contracts is out of range for today's market moves, but as prices move closer to these levels, the potential to put spring and summer lows behind the market is being realized. The ability to close prices near $143 per cwt will instill additional technical market support, helping to draw additional noncommercial back into the market which has been generally silent over the last few months. Cash index for 11/27 is $138.90, up 1.45. Open interest Monday added 233 positions (37,378).

LEAN HOGS:

Open: Mixed. Underlying buyer support slowly redeveloped early Tuesday morning, although the focus on triple-digit gains Monday is creating the opportunity to limit further price shifts as traders adjust positions during the early minutes of trade. Narrow gains are seen in nearly all lean hog futures, although April futures are holding single-digit losses as traders try to balance recent market moves given the lack of active trade volume during Thanksgiving week. Traders are looking for additional confirmation from cash and pork cutout market support, but the underlying moves higher in most commodity and stock markets Tuesday morning is likely to limit downside market moves in the near future. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents higher. Open interest fell 1,645 positions (198,769). December fell 1,455 positions (19,698) and February slipped 241 positions (82,050). Cash lean index for 11/27 is $66.81, down 0.34. DTN projected slaughter for Tuesday is 488,000 head. Saturday runs are expected near 302,000 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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Rick Kment