DTN Before The Bell Livestock

Cattle Trades Look Ahead to Cattle on Feed Report Release

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)

GENERAL COMMENTS:

Mixed trade within a narrow-to-moderate trading range is seen in cattle and hog futures. A combination of limited short-covering and follow-through selling has shown narrow price movements, but still confirms the aggressive market pressure, which developed late Thursday. Corn is trading higher in light-to-moderate trade. Stock markets are lower in limited morning trade. Dow Jones is 15 points lower with NASDAQ down 10 points.

LIVE CATTLE:

Open: Mixed. Live cattle futures remain mixed in a narrow trading range, although most of the traders' focus is driven by limited short-covering following Thursday's aggressive losses. The lack of significant support in all nearby contracts does not offset the bearishness, which swept over the market through the end of the week, but the ability to create potential stability at these lower levels is a good sign that further losses may be avoided. Traders are also likely to make final position adjustments for cattle on feed expectations over the next couple hours, which could add increased volume in most contracts. Cash cattle trade remains quiet early Friday morning, although increased interest is likely to develop through the rest of the day. Some cleanup trade may develop through the day, although if trade is seen before or after the afternoon release of the Cattle on Feed report is still uncertain. Bids are still undeveloped for the day, although asking prices are holding at $110 live and $174 and higher dressed. Open interest added 235 positions (274,808). December contracts lost 2,243 positions (34,089) and February contracts added 1,383 positions (107,020). DTN projected slaughter for Friday is 117,000 head.

FEEDER CATTLE:

Open: Steady to 30 cents lower. Follow-through pressure is seen in feeder cattle trade, although the intensity on Thursday has not redeveloped at this point. Concerns surrounding the upcoming Cattle on Feed report Friday afternoon, and larger cattle placement numbers than last month could also limit additional short-term buyer support. Even though analysts estimate year-over-year placements to be near 90%, the amount of cattle moving to feedlots in October may still be burdensome to the market long term. Current strength in feed prices will continue to be a major obstacle in the feeder cattle market for weeks and months to come. Cash index for 11/18 is $137.51, up 0.13. Open interest Thursday added 366 positions (36,830).

LEAN HOGS:

Open: Mixed. Narrow trading ranges are seen early Friday morning with most contracts holding light-to-moderate gains. At this point, traders are focusing on bringing a sense of stability back to the market before the weekend, although the bearish market tone set Thursday is likely to spark renewed longer-term pressure heading into Thanksgiving week. The fact that nearby contracts are still well below recent support levels of $65 per cwt, could limit active buying interest in what could be a very lightly traded day Friday. Longer-term concerns about maintaining or building strong export demand through the coming months may continue to keep the market under pressure. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest fell 1,058 positions (201,629). December fell 826 positions (30,297) and February gained 361 positions (78,284). Cash lean index for 11/18 is $68.77, down 0.64. DTN projected slaughter for Friday is 485,000 head. Saturday runs are expected at 278,000 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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Rick Kment