DTN Before The Bell Livestock

GENERAL COMMENTS:

Strong market pressure quickly and aggressively moved into cattle and hog futures trade Monday. Feeder cattle futures are leading the complex lower as morning losses are focused on long-term market direction and not nearby trade. Another round of record COVID cases through the weekend is causing active early-week market losses. Corn is trading lower in light to moderate trade. Stock markets are mixed in limited morning trade. Dow Jones is 167 points lower with NASDAQ up 48 points.

LIVE CATTLE:

Open: 50 cents to $1 Lower. Market weakness is seen in all contracts as outside market pressure is taking a toll on overall livestock market support. Although there is little to no more information at this point on specific threats to beef demand over the near future from rising COVID numbers, traders are taking a more defensive approach Monday morning. This is focusing most of the price pressure on February through June contract months, which changes market concern slightly from more intermediate weakness to longer trending demand losses that may develop through most of 2021. Cash cattle interest remains quiet with asking prices and bids not expected during the day and likely not active until midweek or later. The pressure in cash and boxed beef markets last week will continue leave markets defensive, but feeders are still expected to look for steady to higher cash trade by the end of the week. Open interest added 835 positions (279,709). December contracts lost 3,407 positions (13,731) and February contracts added 1,540 positions (114,099). DTN projected slaughter for Monday is 120,000 head.

FEEDER CATTLE:

Open: $1 to $1.25 Lower. Active triple-digit losses are seen in nearby feeder cattle futures despite the early-morning pullback in grain trade. Over the last three weeks, feeder cattle futures have been influenced by the direction of corn and soybean markets with higher grain prices increasing overall production costs, putting pressure on feeder cattle trade. But Monday's activity has more to do with outside market direction as widespread pressure in most markets follow another weekend of record covid cases. This leads to concerns about demand pressure in all areas of the meat segment. Cash index for 12/3 is $139.18, down 0.26. Open interest Friday fell 78 positions (39,585).

LEAN HOGS:

Open: 50 cents to $1.25 Lower. Firm pressure quickly returned to lean hog futures trade with the underlying defensive tone seen late last week sparking renewed selling interest. Although pork cutout values bounced higher Friday, this was not enough to offset the underlying pressure through the entire complex, creating triple-digit losses in February and April futures at opening bell. It is still uncertain just how deep current sell orders remain, which could allow markets to stabilize later in the morning, if any sense of price support is indicated. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest fell 1,668 positions (198,376). December fell 1,722 positions (14,191) and February slipped 356 positions (83,361). Cash lean index for 12/3 is $66.26, down 0.29. DTN projected slaughter for Monday is 493,000 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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