Tuesday Closing Livestock Market Summary

GENERAL COMMENTS

Cash cattle activity remains undeveloped Tuesday afternoon with both packers and feeders looking for additional direction. The bids and asking prices have been unavailable at this point and may remain that way until midweek or later. It is expected that initial asking prices may start to be seen around $137 to $138 on a live basis, but it is uncertain just how early these numbers will be shown at this point. Active trade may not be seen until late in the week. According to the closing report, the national hog base is $2.54 higher compared with the prior day settlement ($73-$82) weighted average $79.76. Corn futures moved higher in light activity. July futures were 3 cents Higher Tuesday. The Dow Jones Index is 92 points higher with the Nasdaq up 44 points. `

LIVE CATTLE

Strong market pressure developed through the last half of the trading session Tuesday as buyers quickly exited the market following triple-digit losses flooding into the feeder cattle complex. This left live cattle futures searching for support while hanging onto strong losses ($0.45 to $0.90 lower). Early support seen in live cattle futures based on short-covering activity and the ability to draw buyers back into the market was short-lived. Traders quickly focused on the triple-digit losses in feeder cattle markets and remain concerned about current and future potential liquidation through the complex. This may lead to additional long-term selling activity. The fact that early pressure also developed in morning boxed beef values is likely to add some concern to markets and add some uncertainty midweek. Beef cut-outs: lower, $0.32 lower (select, $221.45) to down $1.33 (choice, $251.19) with light demand and heavy offerings (52 loads of choice cuts, 42 loads of select cuts, 32 loads of trimmings, 15 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady. Lack of direction is expected to be seen in cash markets midweek following little activity from either packers or feeders on the sides of bids and asking prices. It is expected that bids and asking prices will become more available midweek with the Fed Cattle exchange also trading during the day Wednesday. But active feedlot trade may not be seen until late in the week.

FEEDER CATTLE

Sharp triple-digit losses developed late Tuesday despite early day gains. This left traders focusing on a two-day market slide, which could create uncertainty as traders enter the market midweek (0.80 to 1.60 lower). The inability for early buyer support to hold through the feeder cattle market could create some longer-term pressure in the entire complex with not only triple-digit losses two trading sessions in a row early in the week, but also nearby contracts closing below $150 per cwt for the first time since the end of May. August feeder cattle futures led the market lower with a $1.60-per-cwt loss, pushing prices to $149.95 per cwt. CME cash feeder index: 6/12: $154.21, up $0.06.

LEAN HOGS

Strong nearby contract support developed Tuesday with markets closing mostly higher across the complex ($0.17 lower to $1.57 higher). June lean hog futures are getting ready to expire, allowing July futures to gain market support, as buyers are becoming much more aggressive. This allowed more bullish buyer support to move into the July contract, pushing to triple-digit gains of $1.57 and moving the market to $82.27 per cwt. The ability to bounce back from early week pressure continues to draw underlying support in the complex and help draw overall trade activity into the market. This may not help stimulate deferred buyer activity over the near future, but for now, the focus is squarely placed on short-term buying activity. Carcass values surged higher. Strong gains in ribs and bellies overshadowed firm support in all other primals with all cutout values posting positive values Tuesday. Pork cut-out: $94.97 up $1.83. CME cash lean index for 6/9: $80.59, up $0.57. DTN Projected lean index for 6/12 $81.16, up $0.57. 

WEDNESDAY'S CASH HOG CALL

Steady to $1 higher. Packer interest is expected to remain firm with bids likely to remain steady to $1 higher as most bids are likely to be $1 higher early in the week as packers attempt to gain access to market ready hogs.