DTN Before The Bell Livestock

GENERAL COMMENTS:

Active pressure quickly redeveloped in livestock trade with the aggressive losses in cattle markets Thursday sparking growing concerns that further market pressure may continue to develop. Significant liquidation is not seen, and likely will not develop during the day, but the lack of positive news concerning covid cases will likely limit late-week buying interest. Corn is trading lower in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 127 points higher with NASDAQ up 37 points.

LIVE CATTLE:

Open: 50 cents to $1.50 Lower. Active selling has quickly and aggressively redeveloped in all livestock markets, but live cattle futures are leading the market lower early Friday morning. The focus on falling beef values has created even more uncertainty in futures trade heading into the weekend. Not only has the recent market surge in boxed beef trade started to fade, but the lack of consistent support over the last three weeks in cash cattle and live cattle futures trade in proportion to the boxed beef market is creating concern about further market losses. Nearby contracts are taking most of the heat at this point, with winter and early spring demand the most vulnerable at this point. Cash cattle trade remains at a standstill Friday morning following light trade over the last two days. Clean up activity is not out of the question, but the bulk of needed business is expected to have already been done Thursday evening. Cash cattle prices remain mixed from last week's levels with deals generally $1 lower to $1 higher, although at this point it is uncertain where overall average prices will land. This could create increased uncertainty as the weekly price direction may not be clear until all the numbers are released early next week. Open interest added 1,676 positions (278,876). December contracts lost 1,873 positions (17,139) and February contracts added 310 positions (112,566). DTN projected slaughter for Friday is 119,000 head.

FEEDER CATTLE:

Open: $1 Lower. Firm followthrough pressure in feeder cattle futures is sparking additional concern that prices may continue lower through the end of the week. Although any moves lower through the end of the week will not be able to break below support levels, the change in direction in the market is significant as this move may have set the cycle high at $141.80 per cwt on Wednesday. The lack of positive news in either the livestock market or outside markets over the last couple of days and growing concerns of what record covid cases may do to short- and long-term beef demand continues to be a main focus through feeder cattle markets as well as the livestock industry as a whole. Cash index for 12/2 is $139.44, down 0.43. Open interest Thursday added 310 positions (39,354).

LEAN HOGS:

Open: 50 to 90 cents lower. Steady follow through weakness is quickly developing in lean hog futures trade with the combined pressure Thursday in futures trade and sharply lower pork cutout values has led to increased market weakness through the entire complex. Although trade volume remains sluggish during the first few minutes of trade, the potential to move February futures below $66 per cwt during the session could spark another round of selling at the end of the week. November lows still remain safe at this point, but the lower trend is quickly creating technical damage as traders have quickly backed away from recent cycle highs. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest fell 246 positions (200,144). December fell 655 positions (15,913) and February slipped 616 positions (83,717). Cash lean index for 12/2 is $66.55, down 0.19. DTN projected slaughter for Friday is 492,000 head. Saturday runs are expected near 330,000 head thanks to late week plant adjustments.

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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