DTN Before The Bell Livestock

GENERAL COMMENTS:

Momentum seen during early week trade has sparked further support across the entire cattle complex. Feeder cattle futures are leading the market higher, posting $1 per cwt gains. The ability to draw additional open interest to the market through the end of the month will be essential to sustain the momentum in hog and cattle trade. Corn is trading lower in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 348 points higher with NASDAQ up 35 points.

LIVE CATTLE:

Open: Steady to 50 cents higher. Moderate gains have slowly developed in nearby live cattle futures Tuesday morning. Trade is focused on spillover buyer support from Monday's aggressive market shift. However, the moves higher have not triggered technical buying points. Nearby live cattle futures still remain stuck in a wide sideways trading range; the ability to move closer to resistance levels of $112 per cwt in December futures and $115 per cwt in February is building underlying support with current price levels within $2 per cwt of these levels. Traders continue to focus on the upward shifts in choice and select cutout values, as the ability to maintain active beef movement through the holiday season will continue to add momentum to the entire livestock complex. Cash cattle markets remain quiet with bids undeveloped so far Tuesday morning. A few asking prices are starting to become more evident in the South at $111 per cwt and higher. Cattle are not priced in the North at this point, but more interest is likely as the day continues with both sides likely to wrap any needed sales up by late Wednesday if possible. The combined support in futures trade and surging beef values is likely to create a firm undertone for cash trade needing to take place. Open interest remained unchanged (276,341). December contracts lost 3,059 positions (26,846) and February contracts added 1,680 positions (111,778). DTN projected slaughter for Tuesday is 120,000 head.

FEEDER CATTLE:

Open: Steady to $1 higher. Follow-through support is quickly moving into feeder cattle futures Tuesday morning. Following aggressive gains Monday, the focus on additional traders stepping back into the complex is helping to move price levels back near resistance levels near $140 per cwt. The lack of open interest gains Monday while prices shot higher is adding some limited concern to the overall complex as the upward price shift is not drawing additional widespread volume, but simply allowing current traders to adjust positions at the higher prices. Open interest moves will be important to closely watch over the next few trading days as the limited volume and very active price shifts could allow for further open interest shifts that will impact the entire complex through the end of the year. Cash index for 11/20 is $136.95, up 0.20. Open interest Monday fell 1,005 positions (36,470).

LEAN HOGS:

Open: Mixed. Light to moderate follow-through buyer support is seen in most nearby lean hog futures trade, although the overall lack of volume in the market may quickly limit the upward movement in several contract months through the rest of the session. February contracts are showing narrow losses in the early minutes of trade as traders are focused more on position adjustments after the strong rally over the last few days. The underlying tone remains firm, supported by significant pork stock reductions in Monday's USDA Cold Storage report. But the overall lack of enthusiasm in both cash and pork cutout values over the last several days seems to be adding increased caution to many buyers through the end of November. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to 50 cents lower. Open interest added 499 positions (203,018). December fell 2,033 positions (25,947) and February gained 1,560 positions (81,859). Cash lean index for 11/20 is $67,83, down 0.31. DTN projected slaughter for Tuesday is 489,000 head. Saturday runs are expected at 385,000 head.

Rick Kment can be reached at rick.kment@dtn.co

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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