Tuesday Closing Livestock Market Summary - Livestock Futures Tumble Despite Firm Outside Markets

GENERAL COMMENTS

Cash cattle markets are still generally quiet Tuesday afternoon. There has been increased talk of asking prices in the South at $130 per cwt, although few cattle have been priced. A few bids have developed in the South also with live bids of $124 per cwt developing through the morning Tuesday. At this point, it seems that feedlot managers are unwilling to back away from asking prices, which could likely push trade activity to the second half of the week. No activity has been seen in the North, which is not surprising at this point. The light trade last week may keep packers slightly more aggressive through the week. According to the closing report, the national hog base is unavailable at this time due to packer submission delays. Corn futures are higher in light activity. March futures were 4 cents higher Tuesday. The Dow Jones Index is 567 points higher with the Nasdaq up 148 points.

LIVE CATTLE

Nearby contracts posted moderate pressure while more aggressive losses developed in summer contracts (0.40 to $1.12 lower). The building pressure seen in both feeder cattle and lean hog trade through the Tuesday session limited overall buyer activity at the end of the session. Even though markets remained mixed in a moderate-to-wide range during much of the session, late-day pressure once again focused on the inability to bring buyers back to the table. June and August futures led the market lower at closing bell with prices $1.10 to $1.12 per cwt lower following the nearby weakness in feeder cattle trade. Beef cut-outs: lower, $1.43 lower (select, $202.73) and down $1 (choice, $208.43) with light demand and offerings (70 loads of choice cuts, 31 loads of select cuts, 6 load of trimmings, 17 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady. Despite a few bids and asking prices developing in the South Tuesday, activity early Wednesday is likely to remain undeveloped as traders look for increased direction from futures trade as well as fundamental market moves over the next couple of days. Most trade is likely to be pushed off until Thursday or Friday at this point unless a wild futures shift is seen.

FEEDER CATTLE:

Follow-through pressure developed through the trading session Tuesday. This left markets unsettled as late-day pressure was most evident in nearby contracts ($0.62 to $1.20 lower). Unsettled market direction early in the session allowed for mixed trade activity during the morning. But late-day selling activity brought about increased market weakness to all contracts with triple-digit losses once again developing in nearby trade. This could leave increased volatility developing through the end of the week as prices may continue to erode and pull back from previous gains seen last week. CME cash feeder index for 2/5 is $147.95 down $0.17.

LEAN HOGS:

Firm losses quickly developed across the lean hog complex Tuesday morning with triple-digit losses seen in most nearby contracts ($0.20 to $1.90 lower). Even though lean hog futures have pulled back from session lows at the end of the trading session, there continues to be underlying pressure in the market as triple-digit losses are seen in all contracts through October 2018. The most aggressive losses are focused on nearby trade activity with April futures leading the market lower at $1.90 per cwt. April futures are also holding the most significant discount to summer contracts with prices in April futures $10 per cwt under the June through August price levels. This intense price spread could limit additional buyer interest over the near future. Carcass values continued to quickly erode following aggressive triple-digit losses in the rib, ham and belly markets. Belly prices led the market lower, falling an additional $8.51 per cwt during the day. This accounts for a $17 loss through the first two days of the week. Pork cut-out: $78.23 down $1.89. CME cash lean index for 2/2 $74.48 up $0.38. DTN Projected lean index for 2/5 $74.84 up $0.36. 

WEDNESDAY'S CASH HOG CALL:

Steady to $1 lower. Sluggish activity is expected to be seen through the cash hog markets midweek with most bids expected to be steady to 50 cents per cwt lower, although the full range is likely to be seen steady to $1 per cwt lower. Daily processing schedules through the week are likely to remain near 465,000 head with that total expected on Wednesday. Estimated Saturday runs are at 85,000 head at this point, but could change slightly before the end of the week.