Joe Teale ~ Livestock Angles

The first half of the month of November started with the livestock markets moving higher. Cattle are advancing toward new high territory, while the hogs appear to have turned the corner and are recouping some of their earlier losses of this fall.

The supply of cattle still dominates the market and has been the main focus for quite some time. Packers continue to be aggressive in their bidding for live inventory to fill their needs. This is happening despite the fact that they are deep in the red on each animal. For the time being the supply of cattle is not expected to increase, so this will continue to dominate the market.

On the other side of the coin, so to speak, is the demand for beef. As the beef cutout advances it is noticeable that the demand for beef products shrinks. It would suggest that at some point the supply of cattle will equal the demand for beef and this will end the continuous uptrend we have seen for the past year.

The only question left is: what price does this equate to a top? This is a question no one individual can answer. This will only be answered by the consumers of beef, which falls under the category that the answer to ending high prices is high prices. Until that price is found, expect this current trend to continue with the ratcheting up of prices paid for live cattle. Producers should continue to monitor the market and protect inventories as needed.

The hog market has apparently turned the corner and has begun to advance higher in prices paid for live animals. At the same time the pork cutout is improving, indicating increased demand for pork. It would appear that retailers are featuring more pork these days because of the much higher price of beef at the wholesale level. Because of this disparity in wholesale prices, pork should continue to find increased demand, which should reflect into higher hog prices over time.

On the contrary to the cattle market, the cure for low prices is low prices and this could help the recovery of hog prices in the short run. The caveat to this whole scenario for the hogs is the question of expansion in the industry. It appears that the hog industry is going through some expansion currently and as numbers increase this could halt the price advance in hog prices.

In other words, supply could exceed demand which could slow or end price appreciation down the road. Therefore, producers should be aware of the market conditions and use caution and protect inventories if the opportunities present themselves.

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