Tuesday Closing Livestock Market Summary - Feeder Cattle Futures Plummet Lower in Late-Day Trade

GENERAL COMMENTS

Cash cattle markets remain generally undeveloped, although there are a few token bids in the South at $114 to $116 per cwt, while Northern dressed bids are seen at $187 per cwt. The pressure in futures trade is making feeders nervous, although it appears most will hold out until later in the week. Asking prices are still hard to define, although a few live asking prices are seen around $121 per cwt. This may spark some midweek interest. According to the closing report, the national hog base is $0.29 higher compared with the Prior Day settlement ($54.00-$60.50) weighted average $59.43. The corn futures moved higher in light activity. December futures were 1/4 cent higher Tuesday. The Dow Jones Index is 109 points lower with the Nasdaq down 13 points.

LIVE CATTLE

Despite mixed trade through much of the session, selling pressure became more aggressive near closing bell, leading the market mostly lower ($0.87 lower to $0.05 higher). December futures were the only contract able to hold onto higher prices, while strong selling pressure quickly moved into the nearby contracts and pushed prices nearly $1 per cwt lower through late-day trade. The overall lack of support in the market is not only concerning because of potential end-of-year directional shifts, but the combined pressure in both live cattle and feeder cattle markets may leave traders much more nervous as the week continues. Beef cut-outs: higher, $1.09 higher (select, $186.63) and up $0.89 (choice, $209.08) with moderate to good demand and moderate offerings (61 loads of choice cuts, 25 loads of select cuts, 10 loads of trimmings, 14 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 lower. Developing pressure in futures trade is creating uncertainty through the entire cash cattle market. Although at this point, it appears the pressure has not moved too aggressively into beef values. Packers are expected to keep bids lower, given the softness of futures trade. Active sales may still not be seen until the end of the week.

FEEDER CATTLE:

Sharp losses quickly developed in feeder cattle futures with traders focusing on increased pressure as the day continued. This moved most contracts sharply lower ($2.12 lower to $0.12 higher). Increased underlying weakness continues, which started with wide ranging losses last week. As front-month contracts broke through the $150 support levels, more liquidation flooded into the market. CME cash feeder index for 12/04 is $156.30 down $0.39.

LEAN HOGS:

Initial mixed trade in lean hog futures markets was unable to resist building pressure to back away from previous gains through the majority of the trading session Tuesday. Triple-digit losses developed in February and April contracts with overall weakness seen in all markets ($0.07 to $1.17 lower). Carcass values moved firmly higher as all primal cuts except for bellies posted firm gains, with many holding triple-digit support. Pork cut-out: $84.78 up $0.84. CME cash lean index for 12/01 $63.92, up $0.66. DTN Projected lean index for 12/04 $64.35 up $0.43.

WEDNESDAY'S CASH HOG CALL:

Steady. Lack of interest in futures trade is causing some expectations that cash markets will see some additional underlying pressure through the end of the week. Although the tone of the market remains focused on the potential support in pork values, there is increased interest in overall buyer activity still trying to keep procurement lines at full speed. Wednesday's slaughter is expected at 465,000 head with an expected Saturday run at 215,000 head.