Tuesday Closing Livestock Market Summary - Firm Underlying Supports Cattle Complex

GENERAL COMMENTS

Cash cattle activity remains at a standstill Tuesday afternoon with bids unavailable as packers are unwilling to step into the market at this time. A few asking prices are being floated with prices seen at $108 to $109 live basis and $170 to $172 per cwt dressed basis. Activity in cash markets may not develop until late in the week, although bids may start to be seen over the next couple of days. According to the closing report, the national hog base is $1.05 lower compared with the Prior Day settlement ($47-$53) weighted average $51.08. The corn futures moved lower in light activity. December futures were 3 cents higher Tuesday. The Dow Jones Index is 42 points higher with the Nasdaq up 6 points.

LIVE CATTLE

Moderate gains quickly developed in live cattle futures following lackluster trade that kept markets mixed through most of the session ($0.10 to $0.67 higher). Strong commercial buyer support quickly stepped into nearby live cattle futures late Tuesday as prices moved from a narrowly mixed price range to strong underlying support that was driven by aggressive buying activity in the feeder cattle complex. The lack of support seen in live cattle markets compared to bullish moves in feeder cattle trade over the last two weeks has created some caution. This may be starting to ease with the follow-through support moving into nearby live cattle futures. Beef cut-outs: mixed, $1.13 higher (select, $188.83) to down $0.51 (choice, $192.11) with light-to-moderate demand and moderate-to-heavy offerings (80 loads of choice cuts, 28 loads of select cuts, 25 loads of trimmings, 18 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady. Activity early Wednesday is expected to start out with similar silent activity as seen through the day Tuesday. Bids are undeveloped and likely not to be seen until late Wednesday, and potentially sometime Thursday. A few token bids have developed, but this may not spark active trade until the end of the week. The tone of the market is focusing on steady market levels, but neither side is willing to show much movement at this point.

FEEDER CATTLE:

Moderate to strong support redeveloped through feeder cattle trade as prices continue to ratchet higher ($0.45 to $0.92 higher). Strong follow-through buyer interest seen in nearby contracts through morning trade was able to bring additional commercial and investment trade activity back to the table. This posted the most aggressive gains in nearby fall contract months, as traders try to build on Monday's triple-digit rally. With nearby futures trading between $151.50 and $153 per cwt, the focus on the potential to move above summer highs set in July. CME cash feeder index: 9/18: $150.47, up $0.38.

LEAN HOGS:

Firm underlying support moved into nearby contracts, despite lackluster moves in deferred contracts ($0.15 lower to $1.67 higher). Aggressive buyer support was seen in December contracts, with prices gaining $1.67 per cwt and sparking additional market interest through the week. This move quickly narrowed the price spread between October and December contracts, following an anemic 12-cent-per-cwt gain as most of the trade movement has shifted to December contracts. Pressure in summer 2018 contracts limited the overall support in the market as traders focused on narrow losses due to lack of market trade. Carcass values tumbled lower Tuesday with triple-digit losses in the carcass value based on moderate-to-strong losses in all primals except picnics, which posted a $2.37 per cwt gain. Pork cut-out: $76.32 down $1.77. CME cash lean index for 9/15: $62.82, down 1.25. DTN Projected lean index for 9/8 $61.88 down $0.94.

WEDNESDAY'S CASH HOG CALL:

Steady to $2 lower. Very few market changes have been seen day to day with packers steadily quoting prices in the range, steady to $1.50 to $2 per cwt lower over the last couple of weeks. The firmness seen in futures trade over the last couple of days and potential support in pork values may help slightly, but most bids are still expected to be 50 cents to $1.50 per cwt lower early Wednesday morning. Wednesday plant runs are set at 450,000 head with Saturday procurement likely to hit 225,000 head.