Monday’s trade was supported from the Cattle on Feed report on Friday. The Cattle on Feed report showed tightening supplies in the fourth quarter which was reflected in the deferred months of the feeder cattle contracts. November was up close to 2 dollars at the close while the October contract was up roughly 1.85 at it’s close. Today the market gave back some of its gains from yesterday but stilled showed some support at the lower end of the short-term range around 177 for the October contract. USDA estimated slaughter numbers came in at 125,000 head yesterday which was up from 124k last week and 119k from a year ago. With today’s price action in the feeder cattle market, I believe that the market is going to remain in a range-based trade for the short term and as there continues to be a tightening of supply the market will eventually trend higher.
The hog market had somewhat supportive news that came out today with China lifting COVID restrictions, giving some hope to the thought that would boost imports from China. China’s national average spot pig prices were up %5.85 today. US domestic pork markets fell sharply as the pork cutout prices fell from $110.38 to $106.99. With China being a big influence on the pork future contracts, there could be a bearish sentiment in the market as China had come out and said that they are planning to increase domestic production. The USDA estimated hog slaughter came in at 466k head yesterday which was up from 449k last week and 455k a year ago.