Limit gains of $3 per cwt flooded into lean hog trade midmorning, with active interest redeveloping in all livestock futures. This underlying support through the complex may stimulate longer-term interest, potentially setting summer lows as traders try to break out of the weaker market range. Corn futures are lower in light trade. September corn futures are 8 cents lower. Stock markets are mixed in light trade. Dow Jones is 69 points lower with NASDAQ up 32 points.
LIVE CATTLE:
Strong support has moved into live cattle futures through the morning with traders breaking away from the narrowly mixed market shifts seen at opening bell. Market fundamentals are showing little to no change in direction at this point, but technical support is quickly developing in live cattle and feeder cattle trade, sparking increased buyer support in all markets. August futures have moved above $108 per cwt, breaking through resistance levels of $107.95 per cwt seen in late May. The ability to hold these price levels through the week would likely spark additional underlying buyer support with the next target set at $108.92 per cwt. Cash cattle markets are quiet Tuesday morning with a few initial token bids at $178 per cwt in the North. This is unlikely to gain any attention at this point, especially given the active support in futures trade. Asking prices are still undeveloped, which is likely to push trade off until Midweek or later. Boxed Beef cut-outs at midday are lower, $1.90 lower (select) and down $2.81 per cwt (choice) with light movement of 67 total loads reported (36 loads of choice cuts, 22 loads of select cuts, no loads of trimmings, 8 loads of ground beef).
FEEDER CATTLE:
Active buyer interest quickly moved into feeder cattle trade mid-morning Tuesday following firm selling pressure in corn futures and renewed technical support developing in live cattle and feeder cattle trade. Despite limited gains early in the session, a combination of commercial and noncommercial interest moved into feeder cattle trade, pushing prices $3.50 to $4 per cwt higher. At this point, markets are have not hit limit gains, but the building momentum developing across the complex may spark late-day support, and move prices to the daily limit of $4.50 per cwt once again. This move, if it holds through the week could signify a long-term change in direction within the entire cattle complex.
LEAN HOGS:
Despite moderate to strong follow-through pressure developing early Tuesday morning, trade direction quickly shifted gears as buyers flooded the oversold market. This change in direction quickly sparked increased underlying support, moving August through October futures limit higher with $3 per cwt gain. All contracts are holding triple-digit gains Tuesday, with active support quickly moving into the complex. This underlying support may be the trigger traders have been looking for in order to break away from long-term lows and establish renewed underlying support during the coming weeks. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.21 at $66.08 per cwt with the range from $57 to $69 on 7,222 head reported sold. Pork values surged higher following a $12.27 per cwt rally in belly cuts. Pork cutouts gained $3.70 per cwt at $75.58 per cwt with 213 loads traded. Lean hog index for 7/5 is $71.93, down 0.89, with a projected two-day index is $71.26, down 0.67.
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