DTN Midday Livestock Comments          11/27 11:25

   Monday Morning Trade Flirts With New Lows in Cattle, Hogs

   February live cattle, January feeders and February lean hogs were all 
trading lower at midmorning Monday, extending new lows after last week's 
sell-off.

Todd Hultman
DTN Lead Analyst

GENERAL COMMENTS:

   On the Monday after Thanksgiving, prices of live cattle, feeders and lean 
hogs are trading at new lows, still searching for support in the month of 
November.

LIVE CATTLE:

   February live cattle futures are trading down $0.82 at $170.15, extending 
their lowest prices since March after last week's sell-off marked the February 
contract down $5.82. Monday's report of weighted averages will be interesting 
to see as it looked like southern live trade was down roughly $1 to $2 at $176 
to $177, while northern dressed trade was just over a dollar lower, mostly near 
$280. Seeing cash prices hold firmer than the futures is an encouraging sign, 
and we'll see if negotiated prices showed any better interest from packers last 
week. Last week's estimated slaughter of 538,000 during Thanksgiving week 
wasn't unusual for having a day off and Monday's cattle slaughter is estimated 
at 125,000 by Dow Jones, down from 126,000 last week.  

   USDA's report on Monday morning showed choice boxed beef at $298.38, staying 
near $300.00 while selects were up $3.33 to $272.09 with a total load count of 
32. Overall, the U.S. economy has been supportive for continued beef demand at 
the retail counter. Some retailers have expressed concerns about consumer 
spending, but Forbes reported Black Friday sales at a record high $9.8 billion 
and store traffic up a few percent from last year.

   According to the National Weather Service, parts of central Kansas received 
10 to 14 inches of snow over the weekend, but amounts were lighter elsewhere 
around the central Plains. The snow is not expected to last long as warmer 
temperatures are expected to return during the week and restore road 
conditions. The CFTC will release updated information on trader positions 
Monday afternoon, likely showing more liquidation among specs in cattle. As of 
Nov. 14, noncommercials were net long 42,815 contracts of live cattle.

FEEDER CATTLE:

   January feeder cattle are trading down $3.22 at $216.10, extending last 
week's loss to their lowest prices since February. In November, January feeders 
have experienced a harsh sell-off that puts the futures well below the CME 
Feeder Index, last seen at $226.94 as of Tuesday, Nov. 21. The sell-off that 
was initially triggered by USDA's report of higher placements in September has 
turned into a bearish rout in the futures market, even after the CFTC data for 
Nov. 14 showed noncommercials had exited net longs and have gone slightly net 
short. Monday afternoon's update as of November 21 is apt to show specs holding 
a larger net short position. March corn is trading down 8 cents Monday, a small 
consolation for the sharp drop in feeder prices that shows no sign of slowing 
down yet.

LEAN HOGS:

   February lean hogs are trading down $1.00 at $67.77, another new contract 
low that is being influenced by Monday's selling in cattle and feeders. The hog 
market continues to have the look of an over-supplied market with no sign of 
packers having any trouble securing their weekly needs. Even though U.S. pork 
exports are up 6% so far in 2023, it also doesn't help to see the national 
price of hogs in China at 14.41 yuan per kilogram, among its lowest prices 
since early 2022.

   USDA estimated last week's hog slaughter at 2.221 million head, decent 
activity for the holiday week. Dow Jones estimated Monday's hog slaughter at 
485,000 down from 487,000 a week ago and still at an active pace. Monday 
morning's report of pork cutout values were also encouraging for demand, 
showing the cutout at $89.63, up from Friday and still well above the prices 
packers are paying for cash hogs. Monday's higher cutout was supported by a 
$17.76 gain in bellies and $11.40 increase in picnics. CME's most recent lean 
hog index was projected at $73.60 for Wednesday, Nov. 22.

   Monday morning's Daily Direct afternoon report showed national formula hog 
prices holding at $71.78 per hundredweight, while negotiated trade remains more 
than $10 lower at $60.92, a bearish sign of demand from packers. Technically 
speaking, February hog prices are in an active downtrend, having fallen to 
their lowest February prices in well over two years. The Covid-related 2020 low 
of $52.57 seems too low for this market, but there is no sign of support yet.

   Todd Hultman can be reached at Todd.Hultman@dtn.com

   Follow him on X, formerly known as Twitter, @ToddHultman1




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