Tuesday Closing Livestock Market Summary - Livestock Futures Continue Lower

GENERAL COMMENTS

Cash cattle trade was light in all areas. Live cattle in the South sold at $117 to $118 per hundredweight (cwt), while dressed deals in the North are reported at $188 per cwt. These prices are $3 to $4 per cwt lower. Much of the trade activity was likely directed at attractive basis levels due to the quick erosion of futures trade. It will be interesting to see whether this price movement sets the tone of the market through the week or if packers and feeders will regroup later in the week as they continue to focus on the movement in futures trade. According to the closing report, the national hog base is $1.02 lower compared with the Prior Day settlement ($43-$48) weighted average $46.09. The corn futures are higher in light activity. May futures were 1 1/4 cent higher Tuesday. The Dow Jones Index is 339 points higher with the Nasdaq up 65 points.

LIVE CATTLE

Live cattle futures saw moderate-to-strong pressure despite trading higher and lower most of the session. Futures closed $0.20 to $1.32 lower. Concerns about additional long-term pressure added further weakness to the market, pushing June and August futures below the $100-per-cwt level. There is growing weakness in all nearby and deferred contracts as traders are concerned about eroding cash markets and potential losses in beef markets. Beef cut-outs: lower, $1.17 lower (select, $209.33) and down $0.12 (choice, $219.68), with good demand and moderate offerings (76 loads of choice cuts, 32 loads of select cuts, 10 load of trimmings, 10 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

$2 to $4 Lower. Activity in the cash market is expected to be sluggish early Wednesday morning following light trade Tuesday. Although a significant number of cattle have yet to be sold in all areas, the recent pressure in futures trade has most feeders concerned that follow-through pressure may develop through the week.

FEEDER CATTLE:

After moving higher and lower in a wide trading range through much of the session, most contracts closed with triple-digit losses ($0.30 to $1.77 lower). The previous pressure in the market has been too much for traders to overlook, as buying attempts have moved into the market at different times over the last couple of days but have been unable to hold. April and May futures closed at $130 per cwt after falling $1.35 to $1.40 per cwt, respectively. Front-month futures are down $22 per cwt in the last 1 1/2 months, with essentially no sense of support seen currently or expectations that traders will be able to quickly step back into the market in the near future. The concern is that widespread commodity market swings seen over the last couple months will have even more impact on cattle trade. CME cash feeder index for 4/2 is $134.94, down $0.12.

LEAN HOGS:

Strong follow-through pressure in the lean hog market pushed the May contract beyond a $3-per-cwt-limit loss due to expanded trading limits. Lean hog futures closed $0.12 to $3.62 lower. Continued market pressure was evident throughout Tuesday's session with triple-digit losses seen in all nearby contracts. The lightly traded May contract posted the most aggressive losses of $3.62 per cwt, while other nearby contracts traded $1.40 to $2.60 per cwt lower. The wide spread in nearby contracts continues to be a major concern to the complex. There is currently a $20-per-cwt price spread between April and June futures, which is adding to the market pressure across all contracts. Pork prices remained stable Tuesday following moderate-to-strong shifts in either direction in most primal markets. Picnic and rib markets posted triple-digit losses, while ham markets posted triple-digit gains Tuesday. Pork cut-out: $71.16, unchanged. CME cash lean index for 3/30: $56.72, down $1.32. DTN Projected lean index for 4/2: $56.00, down $0.72.

WEDNESDAY'S CASH HOG CALL:

Steady to $2 lower. Follow-through pressure is expected to develop midweek with packers focusing on gaining access of needed inventory, but unwilling to pay steady money for most hogs at this point. Most bids are expected to be $1 per cwt lower in early morning activity Wednesday. Total slaughter numbers Wednesday are expected to be 465,000 head with an estimated 150,000 head Saturday.