Tuesday Closing Livestock Market Summary - Strong Support Floods Into Livestock Trade

GENERAL COMMENTS

Cash cattle markets are generally quiet Tuesday with only a few token bids developing in Kansas at $106 per cwt. Asking prices are generally undeveloped, but it is expected that feeders will start pricing cattle at $110 and higher in the South and $174 to $176 in the North. Active trade is expected to be delayed until later in the week, with Thursday or Friday trade very likely. According to the closing report, the national hog base is $0.97 higher compared with the Prior Day settlement ($46.50-$51.50) weighted average $49.58. The corn futures moved lower in light activity. December futures were 2 cents lower Tuesday. The Dow Jones Index is 75 points higher with the Nasdaq up 8 points.

LIVE CATTLE

Despite lackluster mixed trade early Tuesday morning, buyers moved quickly and aggressively into the market ($1.20 to $1.47 higher). The focus of most contracts developed around the overall long-term support seen in feeder cattle trade. This helped to bring increased underlying commercial buyer interest to all markets while traders are looking for additional buyer activity through the rest of the complex. December futures once again led the market higher as prices are near $115 per cwt with traders not only focusing on the firm futures support, but also are looking for supporting market moves in beef values and cash trade over the next few days. Beef cut-outs: higher, $0.74 higher (select, $189.02) and up $0.65 (choice, $197.87) with moderate-to-good demand and moderate offerings (57 loads of choice cuts, 26 loads of select cuts, 12 loads of trimmings, 20 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady $2 higher. The early week movement across the live cattle futures is setting up expectations of higher cash cattle trade by the end of the week. But, at this point, bids and asking prices remain generally undeveloped. This is likely to push trade into the last half of the week, focusing on several market factors over the next couple of days.

FEEDER CATTLE:

Triple-digit gains quickly developed and held through the feeder cattle complex as strong upward movement was seen in price levels in all contracts ($1.85 to $2.70 higher). The combined ability of active commercial support moving into the market as well as follow-through interest from investment traders has helped to spark increased overall buyer support not only in nearby contracts, but also deferred 2018 contract months. The potential to carry active support into these markets into next year when cattle supplies are expected to continue to remain aggressive is causing some uncertainty by some market watchers. CME cash feeder index: 10/2: $155.76, up $1.46.

LEAN HOGS:

Firm buying support developed early in the session, with contracts holding gains through most of the trading session ($0.10 to $2.62 higher). Strong gains quickly developed in front-month October lean hog futures Tuesday, although prices pulled back from the limit gains of $3 per cwt seen at midday by the time markets closed. The strong and widespread buyer support seen in all nearby contracts turned out to be rather disappointing at closing bell with October futures the only contract to hold triple-digit gains. The rest of the market quickly eroded in the last hour of trade, settling 10 to 40 cents per cwt higher. Carcass values shifted lower following light-to-moderate pressure in all primals except loins, which posted a $1.57-per-cwt gain. The most pressure developed in ham and belly product values, creating underlying pressure through the entire complex. Pork cut-out: $72.46 down $0.32. CME cash lean index for 9/29: $54.29, down 0.55. DTN Projected lean index for 10/2 $54.39 up $0.10.

WEDNESDAY'S CASH HOG CALL:

Steady to $1.00 higher. Aggressive procurement schedules are likely to bring about additional buyer interest as packers look to expand overall processing schedules through early October. Total runs for the week are expected to remain near last week's levels, but this may continue to put some uncertainty on long-term product movement. Wednesday's slaughter is expected at 460,000 head with Saturday procurement likely to hit 237,000 head.