GENERAL COMMENTS
Cash cattle markets remain generally quiet late Tuesday afternoon with a few token bids developing across cattle country. Bids are seen at $109 live basis in both the North and South, while dressed bids are reported at $173 per cwt in Nebraska. At this point, asking prices appear to be pegged at $113 and higher live basis, and $178 to $180 dressed. Very little feeder interest is being shown these bids even with the pullback of futures. Most likely, cattle trade will be delayed until sometime late Thursday or Friday. According to the closing report, the national hog base is $2.07 higher compared with the Prior Day settlement ($53.00-$62.50) weighted average $60.44. The corn futures moved lower in light activity. December futures were 1/4 cent lower Tuesday. The Dow Jones Index is 40 points higher with the Nasdaq down 2 points.
LIVE CATTLE
Strong losses have swept through the live cattle futures complex as buyers quickly exited the market in the last couple hours of trade Tuesday ($0.55 lower to $1.37 lower). The inability for October contracts to hold prices above $112 per cwt as well as widespread underlying pressure seen in all nearby and deferred contracts led to an abrupt shift in momentum across the cattle market. This could limit additional market activity and support in the near future. Beef cut-outs: lower, $0.72 lower (select, $189.85) and down $1.15 (choice, $197.66) with light to moderate demand and moderate offerings (62 loads of choice cuts, 26 loads of select cuts, 16 loads of trimmings, 16 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL:
Steady to $2 Higher. Overall cash cattle activity remains light heading into midweek with activity expected to develop through the next couple of days. A few token bids have been floated through the afternoon Tuesday, which will give a starting point for midweek activity, but no real ground for support has developed at this point. Active trade is likely to be delayed until the end of the week.
FEEDER CATTLE:
Feeder cattle futures turned quickly and aggressively lower in the last hour of trade after holding narrow mixed trading range through most of the session ($1.42 to $2.12 lower). The turnaround in feeder cattle futures came when nearby live cattle futures gave back strong gains, which had developed through the morning. This lack of follow through support is quickly creating concern that additional liquidation is starting to break lose and could bring additional aggressive losses back into the market through the rest of the week. CME cash feeder index for 10/16 is $155.06 down $0.60.
LEAN HOGS:
Firm nearby pressure developed late Tuesday, although the ability for narrow gains to hold in deferred contracts gave the complex some stability ($1.52 lower to $0.15 higher). Early buyer support, which quickly moved into the lean hog futures complex Tuesday morning, was unable to be sustained as traders continue to look for increased trade direction and quickly backed away from nearby contracts despite fundamental support still seen across the complex. Carcass values eroded Tuesday following a sharp $3.93 per cwt loss in loin values. Moderate price shifts developed in other primals, but could not overshadow the pressure driven by the loin market. Pork cut-out: $74.81 down $0.44. CME cash lean index for 10/13: $60.24, up $0.73. DTN Projected lean index for 10/16 $61.00 up $0.76.
WEDNESDAY'S CASH HOG CALL:
Steady to $1.00 higher. Firm support is expected to redevelop midweek with most bids expected to be 50 cents to $1 per cwt higher. The amount of market ready hogs available at packer's disposal continues to remain aggressive, leaving most traders unwilling to break away from the aggressive procurement schedules seen over the past few months. Wednesday's slaughter is expected at 465,000 head with an expected Saturday run at 195,000 head.
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