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DTN Midday Livestock Comments          11/20 12:08

   Hogs Higher, Cattle Lower at Midday

   Lean hog futures are higher Friday, while cattle contracts are lower.

Elaine Kub
Contributing Analyst


   Lean hog futures have recovered somewhat from Thursday's accelerated drop, 
but live cattle and feeder cattle futures are continuing their losses despite 
relatively firm indications from cash business in the country. Trade volume may 
pick up and shift the tone for live cattle futures as the Friday afternoon 
Cattle on Feed report approaches. December corn is up 1 1/4 cents per bushel 
and December soybean meal is up $0.50. The Dow Jones Industrial Average is down 
179.41 points and NASDAQ is down 1.12 points.


   The December live cattle contract is down $0.575 at $107.675, the February 
contract is down $0.375 at $110.15 and the April contract is down $0.175 at 
$114.025. Cash cattle traders have so far remained quiet Friday and they may 
continue to drag their feet until after the Cattle on Feed report gets released 
Friday afternoon. The report is expected to show anywhere from a 0.9% to a 2.6% 
year-over-year increase in the Nov. 1 inventory (average analyst estimate at 
1.8% increase). It's also expected to show anywhere from a 12.7% to a 4.5% 
year-over-year drop in October placements (average analyst estimate at 90.8% of 
last year's number), but this isn't necessarily as bullish as it sounds given 
how large the October 2019 placements were. Bullish interpretation could still 
be given to any of the numbers in this month's report, once discounted for the 
lighter weights of the animals coming into lots after the persistent drought 
across the High Plains and Southwest. Boxed beef prices are mixed: choice up 
$0.80 ($238.50) and select down $0.12 ($213.77) with a movement of 60 loads 
(31.67 loads of choice, 12.15 loads of select, 7.71 loads of trim and 8.4 loads 
of ground beef).


   The January feeder cattle futures contract, now the front-month contract, 
has continued its downward slide Friday and, by dipping as low as $133 per cwt 
at one point in the morning, given back all the gains it had once made during 
the month of November. Futures trade volume has been relatively deep so far 
during this session, so the losses can't even be blamed on poor liquidity. At 
midday, that January contract is down $1.175 at $134.375, the March contract is 
down $0.65 at $134.30, and the April contract is down $0.45 at $136.125.


   It has been a volatile week in outside markets with the day-by-day prospects 
of a good vaccine (for humans, not swine) to prevent coronavirus cases and 
economic lockdowns being weighed by the various markets, leaving lean hog 
traders to respond. Thursday's steep losses left a buying opportunity for 
traders who judge hogs should stay above $64 per cwt through the end of 2020, 
and their buying interest has pulled lean hog contracts into across-the-board 
gains. The December contract is up $0.80 at $64.50, February is up $2.65 at 
$65.70, and April is up $2.45 at $68.675. The projected lean hog index for 
11/19/2020 is down $0.63 at $68.14 and the actual index for 11/18/2020 was down 
$0.55 at $68.77. Hog prices are higher on the National Direct Morning Hog 
Report, up $0.08 with a weighted average of $58.48, ranging from $50.00 to 
$58.99 on 3,406 head and a five-day rolling average of $58.76. Pork cutouts 
total 229.13 loads with 198.80 loads of pork cuts and 30.34 loads of trim. Pork 
cutout values: down $0.35, $78.87.

   Elaine Kub is the author of "Mastering the Grain Markets: How Profits Are 
Really Made" and can be reached at masteringthegrainmarkets@gmail.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 
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