GENERAL COMMENTS: Cash cattle activity remains sluggish Tuesday with bids and asking prices not fully established at this point. It is expected to be Thursday or Friday before active trade develops, although packer interest should start to improve sometime Wednesday. A few asking prices have surfaced with cattle priced at $122 per cwt live basis. It is not certain that these asking prices will develop in other areas through the week, but levels in this range are likely. According to the closing report, the national hog base is $0.58 lower compared with the Prior Day settlement ($42.00-$47.89, weighted average $46.58).
LIVE CATTLE: Firm underlying support slowly but steadily developed Tuesday as traders continue to focus on widespread cattle gains. Futures closed $0.55 to $0.95 higher. Early lackluster trade limited overall buyer support through the entire complex. This kept prices mixed in a single-digit range early Tuesday, but the ability for buyers to quickly and aggressively shift feeder cattle futures sharply higher with no resistance sparked additional buying in all contracts. Beef cut-outs: mixed, $0.45 higher (select, $201.39) and down $0.96 (choice, $214.46) with light demand and offerings, 133 loads (99 loads of choice cuts, 18 loads of select cuts, 6 load of trimmings, 10 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL: Steady. Cash market activity remains directionless and will likely remain that way early Wednesday morning. This could allow for only limited direction to be seen over the next couple of days with trade expected to be pushed off until late in the week.
FEEDER CATTLE: Feeder cattle buying sparked renewed underlying support through the entire cattle complex following triple-digit gains in all feeder cattle contracts. Futures closed $1.15 to $2.27 higher. Early buyer interest flooded into feeder cattle markets despite the lack of confidence seen in most other markets. With early trade in live cattle futures mixed in a narrow range and most grain markets showing limited life at all, traders quickly pushed spot-month feeder cattle contracts sharply higher. January futures traded from $2 to $2.60 per cwt higher through most of the session, although limited activity during afternoon trade pulled prices away from session highs. CME cash feeder index for 12/10 is $144.96, up $0.90.
LEAN HOGS: Sharp early losses in nearby lean hog trade sparked follow-through weakness through the entire complex ($1.62 lower to $0.45 higher). February futures posted sharp triple-digit losses Tuesday, allowing for increased market pressure to develop in most other markets during the first half of the trading session. Late-day trade volume stepped into deferred contracts, moving prices higher just before closing bell as traders are slowly backing away from the idea that over production may continue well through 2019. The potential for increased demand to be seen across the complex, especially in summer and fall contract months, is helping to solidify buyer support that feeble over the last few trading sessions. Pork values firmed following wide triple-digit price swings in either direction Tuesday. Pork cutout values gained $0.68 per cwt, moving to $73.33 per cwt. CME cash lean index for 12/07: $56.12, up $0.16. DTN Projected lean index for 12/10: $56.98, down $0.14.
WEDNESDAY'S CASH HOG CALL: Steady to $1 lower. Firm follow-through support is expected to be seen early Wednesday morning with most bids expected near 50 cents per cwt lower. The overall lack of support across the complex continues to focus on increased market softness through the entire complex given the strong nearby weakness in futures trade. Wednesday slaughter numbers are expected to be at 477,000 head with Saturday runs estimated at 226,000 head.
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