GENERAL COMMENTS: Sharp gains quickly swept through the livestock trade Tuesday. Hog futures locked in limit gains of $3 per cwt, while nearby feeder cattle contracts rose $4 per cwt. Market support has been building on increased trade interest that has returned following the long holiday weekend. Cash cattle trade remained undeveloped with packers and feeders showing limited interest as they focus on the futures market direction and potential long-term changes developing in cattle trade. A few token bids were floated in the North at $178 per cwt Tuesday. Packers in all other areas remained silent. Asking prices remain unavailable, and while prices are expected to be more available Wednesday, they could be delayed until the futures market shows more stability. The National Daily Direct afternoon hog report was $0.37 higher ($57-$69, weighted average $66.66) on 12,833 head sold. Corn futures posted firm losses with September down 7 cents per bushel. The Dow Jones Index was 22 points lower with the NASDAQ up 43 points.
LIVE CATTLE: Live cattle futures closed $1.05 to $1.97 higher. Live cattle futures were the last to react to renewed buyer support, as trade was mixed through the first half of Tuesday's session. The August contract's shift above its previous July high of $107 per cwt led to spillover buying through the rest of the session. The August contract led the complex higher, rallying $1.97 per cwt to settle at $108.12 per cwt as traders focused on market support expected over the near future. Technical support is developing as traders focus on May highs of $108.92 per cwt, which would break out of the long-term downtrend seen over the last two months. Beef cut-outs: lower, down $2.32 (select, $192.09) to down $2.73 (choice, $214.73) with light demand and offerings, 134 loads (72 loads of choice cuts, 41 loads of select cuts, 4 loads of trimmings, 17 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL: Steady. Limited cash market direction is expected early Wednesday following limited packer interest over the last couple of day. The strong rally in futures trade is expected to firm asking prices over the next day, as packer interest may become more evident midweek.
FEEDER CATTLE: Feeder cattle futures closed $2.97 to $4.37 higher. Despite a sluggish start in feeder cattle trade Tuesday morning, buyer interest quickly picked up. This allowed futures to break out of their recent trading range and move to their highest levels since May. Concerns of higher feed prices limiting cattle price support remain, but the drop in corn futures Tuesday helped to ease those concerns somewhat. The August contract rose $3.97 per cwt to close at $142.87, sparking renewed commercial support through the end of the session. CME cash feeder index for 7/8 is $135.44, up $1.07.
LEAN HOGS: Lean hog futures closed $1.30 to $3.00 higher. Buyers encountered little resistance as they overtook the lean hog complex Tuesday morning. The sharp losses seen over the last several trading sessions left the complex extremely oversold and testing long-term support levels. With technical pressure weakening and no significant changes seen in market fundamentals, this led to an unrestricted rally Tuesday. August through December futures closed the $3-per-cwt limit higher. This will trigger expanded trade limits of $4.50 per cwt Wednesday. The volatility in the complex, combined with ongoing trade and pork demand concerns, is likely to result in wide price shifts in the hog market over the near future. Pork cutout values added $1.89 per cwt, moving to $73.77 per cwt on 419 loads. CME cash lean index for 7/5 is $71.92, down $0.91. The DTN Projected lean index for 7/8 is $71.25, down $0.67.
WEDNESDAY'S CASH HOG CALL: Steady to $1 lower. Strong futures support may help to stabilize the cash market over the next few days. But, at this point, limited changes are expected. Most bids are expected to be steady to weak early Wednesday morning as packers secure end-of-week needs. Wednesday slaughter numbers are expected at 477,000 head. Saturday runs are likely to hit 38,000 head.
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