Tuesday Closing Livestock Market Update - Feeder Cattle Weaken Tuesday

GENERAL COMMENTS

Cash cattle activity remains quiet with only a few token bids developing in the North at $189 dressed basis. It is expected that active trade will not be seen until sometime Thursday or Friday. Asking prices are still hard to define, but expected to be around $123 live and $193 dressed or slightly higher. According to the closing report, the national hog base is $0.45 lower compared with the prior day settlement ($49.00-to-$57.20) weighted average $55.60. The corn futures moved higher in light activity. March futures were 1/2 cent higher Wednesday. The Dow Jones Index is 37 points lower with the Nasdaq down 30 points.

LIVE CATTLE

Mixed trade developed Tuesday afternoon, with prices mostly lower with a firm undertone ($0.82 lower to $0.02 higher). The expectation that additional buyer support may be hovering on the sidelines before the holiday break, and could allow for additional weakness to develop, is causing some concern. The sharp losses in feeder cattle trade added to the concerns. This may bring additional trade activity into the complex, which could spark some underlying pressure through the market early Wednesday morning. Beef cut-outs: lower, $0.69 lower (select, $184.32) and down $1.39 (choice, $201.76) with light demand and offerings (65 loads of choice cuts, 56 loads of select cuts, 10 loads of trimmings, 17 loads of coarse grinds). 

WEDNESDAY'S CASH CATTLE CALL:

Steady to $1 Higher. Early activity in the cattle market is expected to remain just as quiet as it was Tuesday afternoon. The overall lack of support in the market is not creating concern at this point. Packer interest is expected to improve through the next couple of days. 

FEEDER CATTLE:

Sharp triple-digit losses flooded the market despite early stability ($1.17-to-$2.45 lower). The inability to not only hold previous market support, but to turn markets sharply lower as light trade is expected to be seen over the next couple of weeks is creating some wide concerns that additional trade may be unable to rebound in the near future. CME cash feeder index for 12/18 is $152.50 down $0.12. 

LEAN HOGS:

Early mixed trade gave way to moderate to strong pressure ($0.50-to-$1.02 lower). Widespread weakness quickly developed across the entire complex with traders focusing on lack of fundamental support as well as increased concern of technical pressure as markets have moved to December lows due to the most recent market softness. This could allow for additional pressure to develop over the near future. Carcass values firmed slightly with several primals posting strong triple-digit gains. Pork cuts, which did not post strong gains, posted strong losses, creating uncertainty in the overall market. Pork cut-out: $76.27 up $0.41. CME cash lean index for 12/15 $63.18, down $0.93. DTN Projected lean index for 12/18 $62.71 down $0.47. 

WEDNESDAY'S CASH HOG CALL:

Steady to $1 lower. Very little additional activity is expected to develop across the complex with additional pressure likely to be seen midweek. But most bids are expected to be seen steady to 50 cents per cwt lower early in the day Wednesday. Plant runs are expected to be at 465,000 Wednesday.