DTN Before The Bell Livestock

GENERAL COMMENTS:

Early weakness in cattle trade continues to add uncertainty to the entire complex. The price pressure in live cattle futures is the main focus of traders Thursday, although at this point, most moves are seen as minor market adjustments with little directional change seen in the complex. Hog futures have surged higher as active moves in spot December contracts are driving the market higher. Corn is trading lower in light to moderate trade. Stock markets are mixed in limited morning trade. Dow Jones is 158 points lower with NASDAQ up 18 points.

LIVE CATTLE:

Open: Steady to 50 cents lower. Light to moderate pressure is seen in all live cattle contracts as traders look for a combination of market positioning and likely follow-through buying through the end of the week. Although moderate to strong support in boxed beef values will continue to underpin overall price levels, the concern that light packer interest may limit cash market gains is still a concern for nearby live cattle futures. A speedy transition to February live cattle contracts becoming the most active contract over the last week has put more emphasis on February futures trading at or near the $115 per cwt, and much less focus on December contracts. Limited market direction is likely Thursday morning with prices expected to remain contained to a narrow range. Cash cattle interest still remains quiet with bids unavailable at this point, although packer interest is expected to slowly start to develop as the day continues. Asking prices are increasing as feeders become more confident in potentially higher prices at the end of the week. Asking prices are developing at $112 to $114 live and $175 and higher dressed. There will be increased focus on the ability to redevelop buyer support in nearby futures contracts and boxed beef movement Thursday, but a firming tone is developing across the entire cash cattle market. Open interest added 858 positions (273,795). December contracts lost 7,882 positions (55,266) and February contracts added 6,548 positions (95,051). DTN projected slaughter for Thursday is 121,000 head.

FEEDER CATTLE:

Open: Mixed. Feeder cattle futures are mostly lower as traders are still trying to work higher feed costs into the underlying prices levels. Spot November contracts are steady to 5 cents higher in initial trade as short covering is developing following underlying support in beef values and recent gains in live cattle futures. But the lack of support in early 2021 contracts remains evident with moderate morning losses causing traders concern that the grain market gains may not be over. Cash index for 11/10 is $135.97, up 0.12. Open interest Wednesday fell 328 positions (35,552).

LEAN HOGS:

Open: Steady to $1.50 higher. Strong buyer support is steadily developing in nearby lean hog futures trade with December contracts quickly narrowing the discount to February futures as moderate to active morning buying interest moves into the spot month contract. Morning gains have quickly moved prices above the $65 per cwt threshold once again. This has been the trigger point over the last two weeks that has stimulated limited but firm buyer interest moving back into hog trade. The ability to curb recent open interest erosion through the end of the week may create significant market changes in the entire lean hog complex, and spark renewed commercial buying activity. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents higher. Open interest liquidated 1,263 positions (204,672). December fell 6,687 positions (45,312) and February gained 4,610 positions (68,258). Cash lean index for 11/10 is $71.37, up 0.12. DTN projected slaughter for Thursday is 490,000 head. Saturday runs are expected at 277,000 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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