The month of October has started out to be (for the most part) a positive toward the livestock markets. The futures trade has seen rallies in cattle as well as the hogs. The only livestock market which seems to be stumbling a bit is the feeder cattle market. As we move further into the fall and winter months, the question becomes: can the livestock markets continue to advance?
Cattle have found strength during the last several weeks from several areas. One being the good demand from the domestic markets and also good demand from the export markets. Because of this good demand for beef, the packers had to continue to advance their bids for live inventory.
Another positive factor was the fact that market-ready cattle were less than expected at that same time. At the present time, inventories of live cattle are expanding; which could turn the market paid for cattle lower as supply begins to out-distance demand. This could have a negative effect on further price advances in the live trade unless demand picks up to meet the increasing supply.
It appears the feeder market is anticipating this change in the supply and demand as well as the price of corn has increased over the past several weeks. This is likely to reflect lower feeder cattle prices in the near future unless demand for beef picks up or feed costs decline. This points to a period of more defensive-type price activity in the entire cattle complex in the next few weeks.
The hog market has had a good run since July as prices have advanced over $30 cwt. to the present. Good demand for pork in all sectors has driven the hog market higher to levels not seen since 2019. The big question now, will this rally continue into the last part of the year?
The one thing which appears to be changing slightly at this time is the domestic demand as retail prices have increased. The export market has been good for quite some time however.
As prices increase, it could suggest the export of pork may slow. The pork cutout prices have risen at virtually the same pace as the live prices; and it appears the volume of pork cuts has diminished as the prices move higher. This may suggest the current rally we have experienced over the past several months may be at the exhaustion phase in the weeks ahead. Time will give us the answer to that question.
Joe Teale is a commodity broker for Great Plains Commodity in Afton, Minn.