DTN Before The Bell Livestock

GENERAL COMMENTS:

Narrow gains in live cattle and lean hog futures have offset early week losses, as buyer support is slowly stepping back into the complex. This continues to spark renewed interest through all livestock markets despite limited trade volume. Corn is trading higher in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 66 points higher with NASDAQ up 19 points.

LIVE CATTLE:

Open: Steady to 30 cents higher. Early gains have been evident in all live cattle futures trade Wednesday morning, but the lack of follow-through support is keeping price gains narrow. The overall lack of support across the entire complex early in the week is creating an opportunity for upward market mobility, but the lack of significant buying interest could allow for any gains to quickly stall through the rest of the week. Traders are closely focusing on the direction and activity levels of boxed beef markets as well as the movement in the cash cattle market. Cash cattle trade started to slowly develop late Tuesday although most of the needed cattle still need to be bought. Prices dipped lower with most sales falling $2 to $2.50 per cwt from last week's levels. Early trade is seen mostly $108 live and $170 dressed, with ranges from $107 to $108 live and $168 to $170 dressed reported. It is likely that there is not enough trade in some areas to establish a good market trend, so these price ranges and change in the market could see adjustments through the rest of the week. Open interest fell 777 positions (280,382). December contracts lost 1,509 positions (10,968) and February contracts slipped 550 positions (113,423). DTN projected slaughter for Wednesday is 121,000 head.

FEEDER CATTLE:

Open: Mixed. Despite limited buyer support moving into live cattle trade Wednesday morning, feeder cattle futures have focused on the increased corn prices affecting feeding costs. This has allowed for nearby pressure to develop in feeder cattle contracts at opening bell. Even though initial prices have shifted lower, there is underlying buyer support hovering across the entire complex, waiting for any opportunity for sell orders to stall. Given the pressure early in the week, it is likely that light to moderate buying support may develop and hold unless significant shifts are seen in outside market trade over the next few hours. Cash index for 12/4 is $138.28, down $0.90. Open interest Tuesday added four positions (39,829).

LEAN HOGS:

Open: Steady to 30 cents higher. Narrow gains trickled into lean hog futures trade early Wednesday morning as traders focus on the ability for markets to shift higher Tuesday, sparking renewed interest that additional buyer activity may slowly develop as the week continues. The ability to establish price support above $65 per cwt in February futures will continue to gain underlying market support as traders expect pork values to continue to gyrate in a wide and unpredictable pattern ahead of the Christmas holiday based on short-term demand needs. Pork cutout futures are celebrating one month as the new kid on the livestock futures market block. The development of this futures market has been sluggish at best with just over 500 open contracts in the complex. But interest is slowly growing, which is a good sign for the infant market. Futures prices have not deviated from the lean hog complex at this point, which is keeping activity limited. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest fell 381 positions (195,774). December fell 824 positions (11,702) and February added 216 positions (82,970). Open interest in pork cutout futures gained 23 positions (585). Cash lean index for 12/7 is $65.60, down 0.19. DTN projected slaughter for Wednesday is 492,000 head. Saturday runs are expected near 309,000 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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