Tuesday Closing Livestock Market Summary - Sharp Gains Develop in Cattle Trade

GENERAL COMMENTS

Cash cattle activity remains quiet with very little interest seen through the market. A handful of trade developed in Kansas at $123 per cwt. There is likely to be more interest developing Wednesday morning, although active trade may not be seen until Thursday or Friday. According to the closing report, the national hog base is $0.25 lower compared with the Prior Day settlement ($62.00-$70.50, weighted average $69.41). Corn futures are lower in light activity. March futures were 3/4 cent lower Tuesday. The Dow Jones Index is 3 points lower with the Nasdaq up 52 points.

LIVE CATTLE

Moderate-to-strong follow-through buyer support quickly moved into the market. This helped to spark increased underlying support through the complex ($0.57 to $1.17 higher). Commercial support continues to develop across the complex and is likely to keep additional buyers moving into the market. The most aggressive support developed in front-month February futures, which pushed nearby contracts near $125 per cwt. This move has moved through the December highs, and is now at the highest point in over two months. The ability to sustain buyer support through the next several weeks would be huge in helping to draw additional interest and fundamental support back to the table. Beef cut-outs: higher, $0.64 higher (select, $200.16) and up $0.43 (choice, $206.85) with good demand and moderate offerings (71 loads of choice cuts, 27 loads of select cuts, 16 load of trimmings, 20 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 higher. Interest in the cash cattle market remain sluggish with very little activity likely to be seen early Wednesday morning. Bids and asking prices are still unavailable and may remain that way until sometime Wednesday.

FEEDER CATTLE:

Triple-digit gains once again developed in most feeder cattle futures as traders tried to focus on the renewed buyer support over the near future ($0.90 to $1.90 higher). Underlying support quickly developed in the market despite early market pressure and uncertainty in all futures trade. This overall buyer support quickly sparked a sense of bullishness through not only the feeder cattle market, but all cattle traders, and helped to bring increased trade volume back to the table. The upward momentum may help to sustain recent buyer support through the rest of the week. CME cash feeder index for 1/22 is $147.88, up $0.34.

LEAN HOGS:

Mixed trade quickly developed in lean hog trade Tuesday with very little long-term direction developing across any contract months ($0.67 lower to $0.45 higher). The focus on light-to-moderate buyer support moving back into the February futures contract helped to push prices 45 cents per cwt higher. The rest of the nearby contracts eased through the trading session with prices seen 17 to 67 cents per cwt lower. Carcass values firmed Tuesday following additional buyer support seen in all markets except the belly market. Pork cut-out: $83.03, up $0.86. CME cash lean index for 1/19: $73.40, down $0.27. DTN Projected lean index for 1/22: $73.39, down $0.01.

WEDNESDAY'S CASH HOG CALL:

Steady to $1 lower. Overall lack of additional market direction is expected to keep traders focusing on steady to lower cash prices midweek. The potential to bring some market stability to the complex is being limited by the general sluggish moves in futures trade. Although the focus on potential support in pork values and increased demand could help to keep markets stable, the tone of the market remains soft. Estimated procurement levels are expected to be 445,000 head on Wednesday.