Tuesday Closing Livestock Market Summary - Cattle Futures Tumble in Late-Day Weakness

GENERAL COMMENTS

Cash cattle activity remains generally sluggish Tuesday. A few bids started to develop early in the day in all areas at $125 to $126 live and $204 dressed. The recent pressure in futures trade is creating uncertainty in cash markets, although bids are still well under early asking prices. Asking prices are developing at $128 to $129 live basis and $208 and higher dressed. There light trade developed late in the day in the South at $126 per hundredweight (cwt). This is generally $1 per cwt lower than last week. Trade will likely continue to trickle into the market through the week similar to last week. According to the closing report, the national hog base is $0.68 lower compared with the prior day settlement ($51-$57, weighted average $55.73). Corn futures are lower in light activity. May futures were 1/2 cent lower Tuesday. The Dow Jones Index is 132 points higher with the Nasdaq up 17 points.

LIVE CATTLE

Follow-through pressure developed in the last hour of trade Tuesday despite a narrowly mixed trading range through most of the session ($0.57 to $1.15 lower). Traders flooded back into the live cattle complex with active selling redeveloping late in the session Tuesday. This limited any sense of buyer support that attempted to move into the complex during the session. The concern that prices breaking through January support over the last two sessions will allow increased long-term pressure to develop. Prices are currently trading at their lowest level since August 2017 as traders focus on more seller activity in the market in the near future. Beef cut-outs: $0.55 lower (select, $216.74) and down $1.52 (choice, $223.35) with light demand and offerings (77 loads of choice cuts, 31 loads of select cuts, 7 load of trimmings, 19 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $1 higher. The potential to create positive basis opportunities given the recent market volatility in futures trade could spark some interest in buying cattle sooner rather than later. Although trade may be slow to develop, the potential to take advantage of market support could draw some sellers out of the shadows.

FEEDER CATTLE:

Mixed trade that held through most of the morning evaporated at closing bell as selling pressure developed ($0.67 to $0.92 lower). Even though traders took a much less aggressive approach to the cattle complex Tuesday, the focus on lower-moving markets continues to add weakness to the entire complex. The most recent market shift broke through December support, as prices are now trading at the lowest level since August 2017. This is likely to bring about follow-through liquidation in the near future, with potential pressure likely through much of the week. CME cash feeder index for 3/19 is $141.25, down $0.48.

LEAN HOGS:

Trade was mixed throughout Tuesday's session as traders attempted to create some stability following early week pressure ($0.55 lower to $0.30 higher). Initial market pressure in the lean hog futures was offset by traders trying to step back into the market and stabilize price levels. This pushed spot-month April contracts 10 cents per cwt higher. Limited pressure was still evident in other summer contracts as prices fell 7 to 55 cents per cwt. There is underlying concern about future pork export demand due to proposed tariffs. The ability to break away from triple-digit losses seen Monday may add some needed stability to the complex through the end of the month. Pork prices firmed slightly following mixed movement in pork primals Tuesday. The narrow market shifts in most markets limited overall market activity in the complex. Pork cut-out: $72.07, up $0.09. CME cash lean index for 3/16: $64.97, down $0.55. DTN Projected lean index for 3/16: $64.29, up $0.68.

WEDNESDAY'S CASH HOG CALL:

Steady to $1 lower. Sluggish market activity is expected to be seen midweek with activity Wednesday likely to be a carbon copy of Tuesday's cash market direction. Bids are expected to be mostly 50 cents per cwt lower, as packers don't have to search hard to secure needed hogs. Plant processing schedules Wednesday are expected to be at 460,000. Saturday runs are estimated at 108,000 head.