As we end the month of October, the livestock markets appear to show some promise of prices moving higher — at least in the short term. After either trading in a sideways pattern in the cattle market or a large sell-off as in the hog market, both are seeing some potential recovery as we head into the month of November.
The cattle market experienced a strong cash trade on the last Friday of October as packers quickly moved their bids higher to acquire inventory. The high price paid was $115 — substantially higher than the previous day and the highest paid in weeks. The beef cutout has been improving daily for several weeks which inevitably has improved the packer margins to allow the aggressiveness in the acquisition of live inventory. Export business has been fairly good — also helping in giving a positive outlook for the short term. The only question is, how far can this rally take the market at a time with numbers still fairly abundant. Weights are also a bit of a concern as beef tonnage remains more than a year ago. So the demand must stay positive to offset or overtake the supply of cattle into the remainder of the year. Producers should remain in contact with market conditions and protect inventories as needed.
The hog market has shown signs of stabilizing after the past several weeks of seeing price depreciation. Cash and pork cutouts have fallen off recent highs made in the month of July and are showing signs of recovering at this time.
The futures market, which has seen a deep discount to the cash index, has closed that gap in the past few days suggesting the futures market is overdone. Pork cutouts are still drifting lower. However, movement of product has picked as the cutout has dropped — indicating interest in demand.
Exports continue to remain good, also helping the demand picture. The problem will continue to be the inventory of hogs which may continue to offset the demand for pork. Another situation that continues to be in the picture is the African swine flu which is plaguing the Asian countries. This could possibly increase the exports of pork to those areas if it does not come under control.
Because of so many unknowns that could affect the market, producers are recommended to stay in touch with the market conditions and protect inventories if needed.