Tuesday Closing Livestock Market Summary - Sharp Losses Flood Into Livestock Trade

GENERAL COMMENTS

Cash cattle activity remains at a standstill following the aggressive pressure in futures markets, as well as the inability for packers to show any interest early in the week. It has been reported that a few cattle have been priced at $124 through the South, but the triple-digit market slide Tuesday could adjust these levels as the week continues. It is likely that both sides will remain sidelined until some of the dust clears, although active trade may still not develop until late in the week. According to the closing report, the national hog base is $0.27 lower compared with the Prior Day settlement ($54.00-$59.50) weighted average $58.66. The corn futures moved lower in light activity. December futures were 4 cents lower Tuesday. The Dow Jones Index is 48 points lower with the Nasdaq down 29 points.

LIVE CATTLE

Sharp losses quickly developed in all livestock markets Tuesday, drawing additional liquidation and downward market prices through all live cattle contracts ($0.95 to $1.90 Lower). Aggressive market pressure in deferred contracts led the complex lower with prices falling $1.50 to $1.90 per cwt as traders quickly focused on the inability to curb losses in feeder cattle markets. The pressure of January feeder cattle futures falling over $3 per cwt and adding to the already strong losses through the month of November left traders running for the door. Feeder cattle futures have posted a market slide of $8 per cwt since the beginning of the month. This is adding even more weakness to the complex and could create uncertainty through the rest of the year in all cattle markets. Beef cut-outs: lower, $0.34 lower (select, $193.49) and down $2.14 (choice, $210.67) with moderate demand and offerings (52 loads of choice cuts, 47 loads of select cuts, no loads of trimmings, 25 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $4 Lower. Cash markets are expected to remain inactive early Wednesday morning with both packers and feeders still trying to grasp the long-term implications of the recent market slide. This is likely to postpone cash market activity until later in the week with bids likely to remain hard to find over the next day or so.

FEEDER CATTLE:

Sharp pressure which developed early Tuesday morning in most feeder cattle trade quickly led the entire complex lower throughout the trading session. This posted triple-digit losses in all contracts ($1.07 to $3.07 Lower). Continued pressure added to the already weak cattle complex. Front month November contracts remain lightly traded, putting most of the focus on January and March contracts which posted the most aggressive losses of the session. It is expected that this round of selling will quickly bring additional liquidation back into the complex over the near future. Even following the aggressive turn lower since the beginning of November, feeder cattle futures remain nearly $3 per cwt above initial support levels. This wide range is likely to cause even more volatility through the rest of the month. CME cash feeder index for 11/10 is $160.05 up $0.68.

LEAN HOGS:

Strong early week losses quickly swept through the hog complex, leaving traders looking for a sense of market stability before the end of November ($0.60 to $2.80 lower). Nearby contracts posted the most aggressive market weakness as the continued pressure seen in early November is still building downward market momentum. December futures settled below $60 per cwt for the first time since late September. This move lower accounts for an $8 per cwt selloff since the beginning of the month. Traders continue to focus on the potential for additional liquidation following weak cash and fundamental market moves over the past several days. February futures led the market lower, flirting with limit losses, but closing $2.80 per cwt lower at $67.50 per cwt. Potential short covering may develop early Wednesday, although the tone of the market remains extremely weak with no sense of buyer support likely to be seen in the immediate future. Carcass values firmed following sharp gains in bellies and ribs. This offset pressure in loins and hams. Pork cut-out: $81.81 down $0.42. CME cash lean index for 11/10 $67.00, down $0.47. DTN Projected lean index for 11/13 $66.68 down $0.32.

WEDNESDAY'S CASH HOG CALL:

Steady to $2 Lower. Moderate follow through pressure is expected to develop through the week, with bids expected to range from steady to $2 per cwt lower. It is expected that most bids will be $1 per cwt lower early in the midweek session as trades look for additional direction from both futures trade as well as pork cutout values. Wednesday's slaughter is expected at 465,000 head with an expected Saturday run at 152,000 head.