Feeder cattle futures opened higher on Monday, reaching new highs before reversing and falling back. Some of the selling could be attributed to the market being overbought. Additionally, news of Cargill cutting 5% of its workforce due to shrinking profits also played a role. Some of these cuts will be in the meat processing division, which has pressured margins. However, this may not have a significant impact on overall beef processing in the nation but was enough to trigger some selling as traders reacted to the news. Despite this, the bullish aspect of the cattle herd and tight supplies remains unchanged. Boxed beef prices were higher, with choice up $2.49 and select up $2.70, indicating strong consumer demand. Traders are cautious though, given the amount of cattle purchased for deferred delivery last week. The Commodity Futures Trading Commission's (CFTC) Commitments of Traders report showed fund traders adding 6,497 long futures positions in live cattle, bringing their net-long total to 118,350 contracts. They also increased their net-long positions in feeder cattle by 3,036 contracts to a net-long position of 15,467 contracts.

Market Reactions and Opportunities

The market's reaction to the news of Cargill's job cuts in the meat processing division might have been a short-term knee-jerk response rather than a long-term impact. Feeder cattle futures were overbought, and Monday's weakness could have triggered a liquidation phase. However, it's important to note that the cattle market was overbought and needed to correct. This weakness could potentially be seen as a buying opportunity as cattle numbers remain tight. Packers may not be as aggressive this week as they were able to purchase cattle for deferred delivery last week. They might continue to reduce the slaughter pace to improve margins.Hog futures continue to make new contract highs as traders trade the trend. Hog supplies do not seem as plentiful as reported earlier this year. Hog futures again find themselves at a record net-long position. Any bearish indication might trigger substantial selling. Packers are maintaining a strong slaughter pace to keep up with demand and improve packer margins. They have been able to purchase sufficient hogs for increased processing speed without difficulty, which may limit what they will pay for hogs.For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.Hog Futures: Strong Buying and Market OutlookHog futures witnessed strong buying interest on Monday, reversing the losses from Friday and pushing June through October to new contract highs. Both June and July closed above $102, indicating that traders remain bullish on the market as we move into the end of the year and through 2025. Packers were aggressive as they needed to meet demand and continue to maintain a strong slaughter pace. The National Direct Afternoon Hog report showed cash up $0.18, with greater packer interest expected on Tuesday. Cutouts showed strong gains, with values up $2.35. December is generally a strong month for demand, and this year may be no exception. Hog numbers also seem to be tighter than reported earlier. The CFTC's Commitments of Traders report showed fund traders increasing their net-long position by 7,074 contracts to a total of 130,169 futures contracts and a record net-long position.The hog market shows promising signs with strong buying and continued upward momentum. Traders are optimistic about the future, and the tight supply situation is likely to support prices. Packers' efforts to meet demand and maintain a high slaughter pace are crucial factors in the market's stability. As we move forward, it will be interesting to see how these trends continue to unfold and what impact they will have on the overall livestock industry.For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.