After the cattle market’s amazing rally last week, traders are wanting to see follow-through support before they bolster the market higher again this week.
Cattle futures are overconfident thus far Monday as traders desperately yearn to see follow-through support from the market’s fundamental sense before making further advancements on top of what last week accomplished. Meanwhile, the hog complex isn’t worried about trading grimly and sees robust support in the furthest deferred months.
December corn is down 7 3/4 cents per bushel and January soybean meal is down $4.60. The Dow Jones Industrial Average is up 309.47 points and NASDAQ is up 303.63 points.
If the cash market isn’t on the forefront of your mind, I’m not sure what would be because the current cash cattle market is utterly amazing. Just three weeks ago the market thought it died and went to heaven when fats broke $130; now the upper end of last week’s trade peaked at $140. The sheer demand the beef market is seeing is incredible and it’s beyond evident that packers are short-bought and the availability of market ready cattle is thin.
This bodes extremely well for feedlots and, as long as packers keep an aggressive chain speed, this hype in the fat cattle market could sustain well into 2022. The futures complex is hesitant to rally into Monday’s trade as traders are tiptoeing into the week’s business, needing to see follow-through support from the market’s fundamental sense.
December live cattle are down $1.30 at $136.80, February live cattle are down $1.97 at $139.22 and April live cattle are down $1.55 at $142.25. Given that packers again committed most of last week’s purchases to the nearby delivery slot leads one to believe there will be good interest in this week’s cash cattle market. Showlists this week are steady in Texas, higher in Kansas and lower in Nebraska/Colorado.
Last week’s negotiated cash cattle trade totaled 110,593 head. Of that 90% (99,083 head) were committed for the nearby delivery while the remaining 10% (11,510 head) were committed for the deferred delivery of the following 15 to 30 days.
Boxed beef prices are higher: choice up $2.56 ($282.57) and select up $0.73 ($263.01) with a movement of 28 loads (16.33 loads of choice, 8.01 loads of select, zero loads of trim and 3.24 loads of ground beef).
The feeder cattle market is regressing after posting lavish gains last week. Last week’s Friday-to-Friday livestock contract changes shared that last week the January feeder cattle contract jumped by $6.22, and the March feeder cattle contracts grew by $4.60. So, to see traders stepping back and looking for follow-through support come Monday isn’t unusual.
January feeders are down $1.42 at $165.72, March feeders are down $1.67 at $166.30 and April feeders are down $1.65 at $168.22. The market’s regression doesn’t come from a fundamental standpoint but rather from a technical sense as traders need to see follow-through fundamental support in order to feel comfortable moving the complex higher yet again this week.
All throughout last week both feeder cattle and calves sold with phenomenal demand so it’s likely sales early this week are met with the same aggression.
Despite the spot December lean hog contracts traipsing just barely below steady, the lean hog complex is trading mostly higher Monday and is seeing significant gains in its furthest deferred months. December lean hogs are down $0.05 at $73.15, February lean hogs are up $0.55 at $81.57 and April lean hogs are up $0.75 at $86.15.
Traders are seeing the strong fundamental support in both the pork cutout value and in the cash market as positive signs to further the hog market’s upside and to forget about Friday’s rocky close.
The projected CME Lean Hog Index for 11/26/2021 is down $1.03 at $70.60, and the actual index for 11/24/2021 is down $0.93 at $71.63. Hog prices are higher on the National Direct Morning Hog Report, up $0.13 with a weighted average of $55.10, ranging from $52.00 to $57.00 on 5,885 head and a five-day rolling average of $55.00. Pork cutouts total 148.02 loads with 132.74 loads of pork cuts and 15.28 loads of trim. Pork cutout values: up $7.50, $91.48.