DTN Early Word Livestock Comments

Cattle: Steady Futures: Higher Live Equiv: $191.64 -$0.88*

Hogs: Lower Futures: Mixed Lean Equiv: $104.48 -$1.44**

*Based on formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. Index has been updated to depict recent changes in live cattle weights and grading percentages.)

** based on formula estimating lean hog equivalent of gross packer revenue.

GENERAL COMMENTS:

Live cattle tried to push higher but failed. December closed slightly higher as it remains close to cash. Later contracts are faltering and entrenched in a downtrend. February and April contracts have eliminated nearly all the gains over the past month. It seems the anticipation for higher cash this week has waned with the hope being for steady cash. Lower boxed beef prices are not helping with choice down $0.96 and select down $2.06. Packers will be purchasing for the shorter week next week, but if the price is right, they may purchase for deferred delivery after Thanksgiving, putting them in a better position for the following week. The Commitment of Traders report showed funds reducing their long positions by 3,825 to a net long of 60,179 contracts.

Hogs opened higher, then shot up quickly about an hour later on the positive news coming from the meeting of the U.S. and China presidents over international relationships. This provides hope that China's demand for pork will continue and increase. The sharp rally of futures did not last long with prices falling back to where they had been. Cash traded lower as expected with the National Direct Afternoon report down $1.26. Cash is expected higher Tuesday, but the recent market seems to be breaking out of the usual pattern that has been seen, making it anyone's guess what cash will do. Cutouts Monday were down $1.44. The Commitment of Traders report showed funds as net sellers of 5,310 contacts, bringing their net-long futures positions to 52,559 contracts.

	BULL SIDE		BEAR SIDE
1)	Feedlots should hold for at least steady cash this week, which should support the market.	1)	Cattle have been unable to trend higher, even though corn prices have been weakening. Feeder cattle futures are down near the lower end of the recent trading range.
2)	Slaughter pace continues to run above a year ago. Cattle will continue to be pulled forward.	2)	Packers have some cattle already purchased ahead for this week, leaving them less aggressive. They are purchasing for a shorter slaughter week but may also increase purchase for the following week to provide a greater cushion.
3)	Higher hog slaughter and lower weights should support the market as market-ready hogs are current.	3)	Cash and cutouts continue to struggle. The expected increase in demand for the holidays seems to be delayed or may never materialize.
4)	Positive news from the meeting between President Biden and China's President Xi should keep exports ongoing with China.	4)	The lean hog index continues to weaken, leaving little reason for futures to rally to meet cash at this point as there is about a month remaining for the December contract.

**

For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.

Robin Schmahl can be reached at rschmahl@agdairy.com

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