GENERAL COMMENTS: Lean hog futures saw triple-digit gains Tuesday as traders focused on growing fundamental support as well as technical shifts in the market. Cattle futures, on the other hand, saw limited direction due to inactive trading. Cash cattle interest remained slow to develop with a few token bids starting to develop in Nebraska on Tuesday. These bids are listed at $198 per cwt, which is not bad for starter bids. Generally, though, asking prices and bids are sketchy at this point and will likely not see more definition until Wednesday or later. Most cattle trade is expected to be pushed off until Thursday or Friday. The National Daily Direct afternoon hog report is $0.69 lower ($45-$49.45, weighted average $48.19) on 16,515 head sold. Corn futures were higher in light activity with the March contract up 5 1/2 cents. The Dow Jones Index was 372 points higher with Nasdaq up 106 points.
LIVE CATTLE: Most live cattle contracts showed limited direction in light trade. Prices settled $1.00 lower to $0.22 higher. Traders slowly backed away from early week contract highs in nearby contracts. The front-month February contract was down $1 per cwt, although the limited volume in this contract on Tuesday minimized the credibility of the drop. Other nearby contracts were steady to 42 cents lower as traders backed away from what they have considered an overvalued market. Additional moderate shifts are likely through the rest of the week as traders adjust for fundamental support and focus on technical shifts seen over the last couple of days. Beef cut-outs: mixed, $0.86 lower (select, $213.00) to up $0.28 (choice, $217.16) with light demand and light-to-moderate offerings (107 loads -- 68 loads of choice cuts, 19 loads of select cuts, 8 load of trimmings, 12 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL: Steady. Despite a few token bids in the North developing Tuesday, overall, cash markets remain at a standstill. This is likely to limit any direction until sometime Thursday or Friday. The Fed Cattle Exchange Auction will take place Wednesday, but it is uncertain if any trade will take place on the auction.
FEEDER CATTLE: Feeder cattle futures settled mixed ($0.27 lower to $0.30 higher) in sluggish trade. Single-digit moves were bookended by more significant moves in lightly traded contracts. The March futures contract was down 27 cents due to inactivity as traders roll out of the contract. The January 2020 contract posted the biggest gain, again limited by very thin trade that far out. Most other 2019 contracts moved by only a few pennies as traders focused on grain market gains and choppy moves in live cattle markets. Traders are expected to become more active through the rest of the week as longer-term market direction becomes more evident. CME cash feeder index for 2/11 is $141.68, up $0.05.
LEAN HOGS: Most nearby lean hog futures closed triple digits higher Tuesday. Overall, futures settled steady to $1.72 higher. The ability for higher prices to hold early in the week has started to change the tone of the market. Traders are no longer looking at this shift higher as a "one-day grasp at support." The ability to boost prices off long-term support levels has sparked renewed trade activity, causing a market reversal through most nearby contracts. April has rallied over $2 per cwt off market lows so far this week, closing at $60.32 per cwt on Tuesday. Pork prices slipped lower Tuesday in active trade based on softness in butt and picnic cuts. Pork cutout values fell $0.24 per cwt, moving to $65.22 per cwt on 376 loads. CME cash lean index for 2/8 is $56.14, down $0.39. DTN Projected lean index for 2/11 $55.91, down $0.23.
WEDNESDAY'S CASH HOG CALL: Steady. Market stability is starting to creep into cash hog trade as a result of strong underlying support in futures trade. This is expected to leave most bids steady early Wednesday morning, but could spark some additional buyer support later in the day. Wednesday slaughter is expected at 477,000 head. Saturday runs are expected at 114,000 head.
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