Tuesday Closing Livestock Market Summary - Livestock Futures Rally on Month End Buying

GENERAL COMMENTS

Cash cattle remain undeveloped Tuesday afternoon with bids and asking prices still undeveloped. Given the surge in cash prices last week and follow through support in futures trade, it is a safe bet that feeders will price cattle higher and remain focused on these prices for most of the week. But feedlot managers have good reason for not being willing to show their hand too quickly given the aggressive tone of the entire market. Bids and asking prices will likely become more evident Wednesday, although active trade may be delayed until the end of the week. According to the closing report, the national hog base is $0.43 lower compared with the Prior Day settlement ($58.00-$65.36) weighted average $64.37. The corn futures moved lower in light activity. December futures were 3 cents lower Tuesday. The Dow Jones Index is 35 points higher with the Nasdaq up 32 points.

LIVE CATTLE

Triple-digit gains held in all but expiring October contract months Tuesday as traders prepared for month end ($0.92 to $2.22 Higher). Strong underlying support quickly moved into the December and February contract months with each of the contracts moving $2 per cwt higher through the Tuesday session. December contracts will now take over as spot month futures contracts with prices quickly moving above $125 per cwt. This will likely put even more focus on both cash and beef values through the end of the week. Buyer support is still partially focused on the fundamental support seen in last week's cash market trade. But the expectation that additional strong demand over the coming months will draw additional buyer interest back into the market. Beef cut-outs: higher, $0.26 higher (select, $193.90) and up $3.12 (choice, $206.44) with moderate demand and heavy offerings (64 loads of choice cuts, 45 loads of select cuts, 21 loads of trimmings, 19 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 Higher. Strong futures trade support through most of the trading session Tuesday is putting emphasis on additional cash market support. However, the overall lack of interest by packers or feeders in establishing active bids or asking prices will likely push cash cattle trade to the second half of the week. This may push trade to Thursday and potentially late Friday once again.

FEEDER CATTLE:

Feeder cattle futures closed following strong triple-digit gains in most contracts ($0.55 to $2.22 Higher) following the strong two day swing seen across all cattle markets. November and January futures led the complex higher with prices nearing the $160 per cwt level. Trade earlier in the session moved price levels above this $160 per cwt market price, but the inability to spark additional carry over buying activity at the end of the session pulled contracts off of session highs. Even though the market posted aggressive gains, end of month position taking was seen in the last hour of trade. This market shift could allow for additional market volatility when traders return to the complex Wednesday with a fresh month ahead of them. CME cash feeder index for 10/30 is $156.92 up $1.99.

LEAN HOGS:

Sharp gains quickly developed in nearby lean hog futures trade in the last hour of trade Tuesday following the support seen through most of the session and spill over buying coming from the cattle complex. Despite lackluster interest in deferred futures, most contracts closed higher (steady to $2.85 Higher). December futures closed at $68 per cwt following a $2.85 per cwt rally, while February futures rallied nearly $2 per cwt higher in late day trade, moving to $73 per cwt. It is uncertain just how much momentum will be carried over into the month of November, but the overall market continues to carry a bullish tone. Carcass values trickled slightly lower following choppy moves through all primal markets. Marginal gains in Loins, Picnics and Bellies, were offset by similar losses in Butts, Ribs, and Ham cuts. Pork cut-out: $78.54 down $0.03. CME cash lean index for 10/27: $69.09, up $0.15. DTN Projected lean index for 10/30 $69.08 down $0.01.

WEDNESDAY'S CASH HOG CALL:

Steady to $1 Lower. Despite the strong futures market support early in the week through livestock futures, cash buying activity is expected to start out steady to $1 per cwt lower as traders continue to focus on the readily available access to hogs. Even though packers continue to aggressively push plant speeds, the limited support through the end of the month of October may continue to curb early buyer incentives. Wednesday's slaughter is expected at 465,000 head with an expected Saturday run at 170,000 head.