DTN Before The Bell Livestock

Livestock Start Mostly Lower Monday

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Nick Scalise)

LIVE CATTLE:

Open: Unchanged. December cattle are trading down 15 cents, an early response to Friday's report from USDA that September placements were up more than expected at 6% and the on-feed total of 11.72 million head was also more than expected, up 4%. Slaughter has been keeping a good pace, but coronavirus concerns are not going away with new highs for U.S. infections reported by John Hopkins University Friday. Weather may become a factor later Monday as bitter cold conditions and snow in the western U.S. Plains are likely stressing livestock. USDA estimated last week's cattle slaughter at 643,000, up slightly from a year ago. Live cash sales were reported at $103 to $106.50 last week, mostly around $106.00. Dressed sales ranged from $162 to $166 and USDA will provide a weighted average later Monday. Last week's lower cash trade paints a bearish picture early in the fourth quarter along with USDA's report from last Monday that dressed negotiated prices were roughly $5.00 below formula prices. Friday's boxed beef finished the week at $207.49 for choice, down $2.54 from the previous Friday. Selects ended at $191.40, roughly $2 lower on the week. Both prices should allow for good retail movement. Technically, December live cattle are correcting from a four-month uptrend and should have support near $100.70, the June low. Friday's weekly CFTC data showed noncommercial net longs in live cattle dropped 15,731 to 41,345 as of Oct. 20. Total open interest was up 983 at 271,191 on Friday's mixed trade. October contracts were down 408 at 1,764 and December contracts were up 529 at 107,744.

FEEDER CATTLE:

Open: 2 cents lower. November feeder cattle are unchanged early Monday, struggling to find support at a time when corn prices have been on the rise and cattle numbers have been proving sufficient for packer demand. Much like cattle, feeders also benefited from a return of consistent slaughter levels through the summer, but more recently, are also battling the bearish headwinds of plentiful cattle supplies and heavier slaughter weights. The Feeder Cash index for October 22 is listed at $134.01, down $6.21 from a week ago and appears headed toward the lower November futures price. From a technical viewpoint, November feeder cattle are correcting their previous four-month rally and have potential support at the six-month low of $127.90. Commercials are also offering support, holding 6,600 net longs as of Oct. 20. Total open interest was up 458 at 46,100 on Friday's lower trade. October contracts were down 5 at 1,379 and November contracts were down 250 at 7,093.

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LEAN HOGS:

Open: 35 cents lower. December hogs are down $1.27 early Monday, challenging support near $66.00 after last week's drop from an attempt to trade above $70.00. Last Thursday's lighter showing of export sales added to concerns about China's level of demand and their effort to rebuild the hog herd. The most bullish factor for hog prices lately has been the CME's Lean Hog Index trading at $78.54, up $0.21 from last week and $11 above the December contract. Otherwise, pork cutouts fell to $93.25 Friday and the negotiated hog price at $59.02 indicates hog supplies are easily available for packers' needs. USDA estimated last week's hog slaughter at 2,679,000, down only slightly from a year ago. Friday's packer margin was estimated by Dow Jones at $60.18 per head, plenty of incentive for packers to keep buying. Friday's weekly CFTC data showed noncommercial net longs in lean hogs increased 2,084 to 42,064 as of Oct. 20. Total open interest was down 377 at 218,066 on Friday's higher trade. Open interest in the December contract was down 1,290 at 86,327 while February contracts were up 763 at 47,024.

Todd Hultman can be reached at Todd.Hultman@dtn.com

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Todd Hultman