Tuesday Closing Livestock Market Summary - Cattle Inventories Steady

GENERAL COMMENTS: All livestock markets were under pressure Tuesday with traders unwilling to step back into the complex following concerns that trade issues with China remain far from resolved. Hog futures were able to regain initial losses, while triple-digit losses continued in cattle futures. Limited direction is seen in cash cattle trade with both sides waiting until later in the week in order to hopefully move markets in their respective direction. Bids were undeveloped at this point in the week, although limited asking prices redeveloped around $108 in the South and $178 to $180 in the North. Although both sides would rather not wait until late Friday, it is likely that delayed trade will be seen given the lack of follow-through support in futures trade. The National Daily Direct afternoon hog report was $1.14 lower ($54 to $63.00, weighted average $61.57) on 14,733 head sold. Corn futures eroded following widespread market pressure with December down 2 cents. Stock markets were lower in moderate trade with the Dow down 74 points and the NASDAQ down 21 points.

LIVE CATTLE: Futures closed $0.60 to $1.22 lower. Traders are steadily walking back early week gains with moderate-to-firm losses developing across the complex. A late-day move pushed spot-month October below $100 per cwt to close at $99.77 per cwt. The move below $100 per cwt is more of a psychological defeat to the market than a technical or fundamental benchmark. Traders continue to focus on strong supplies given the lower daily slaughter numbers and packers' general lackluster interest in securing more cattle. Although weekly kills continue to keep pace with pre-fire slaughter totals, the weakness in the futures trade continues to hold given limited incentive to aggressively push prices higher. Total cattle numbers as of July 1 were generally steady in the U.S. and Canada, according to a USDA cattle report released Tuesday. With no percentage change from 2018, overall beef cattle numbers were fractionally lower than last year. Beef cut-outs: lower, down $0.95 (select, $210.71) to down $1.30 (choice, $236.76) with light demand and moderate-to-heavy offerings, 112 loads (43 loads of choice cuts, 40 loads of select cuts, 17 loads of trimmings, 11 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL: Steady. Asking prices are expected to slowly redevelop midweek in current ranges, but bids are not expected to be active at this point in the week. Most trade is likely to be pushed to the last half of the week, although packer interest may slowly improve.

FEEDER CATTLE: Futures closed $0.10 to $2.22 lower. Pressure developed in the feeder cattle market Tuesday with traders quickly erasing early week gains. Back-and-forth market shifts based on alternating tariff announcements and hopes that a trade deal with China is near have left the market empty once again. This allowed moderate-to-active pressure to develop in most markets Tuesday afternoon. The September futures contract was down $2.22 per cwt, searching for short- and long-term support. The continued focus on ample supplies over the last six months and uncertain demand overshadowed early week news of a trade deal in the works with Japan that the U.S. hopes to have approved before the end of the year. The CME cash feeder index for 8/26 is $138.38, up $0.84.

LEAN HOGS: Futures closed $0.10 to $1.12 lower. Limited pressure developed late Wednesday as traders tried to slowly back away from early week gains. Triple-digit losses that developed at midday were unable to spark late-day buyer interest. With most nearby contracts holding very narrow losses of 10 to 20 cents per cwt, the focus on potential market stability is helping to create some underlying support between $62 and $63 per cwt. The significant discount to cash markets that the futures trade continues to hold is likely to limit the downside movement in the market despite continued concerns of China trade issues and their impact on the lean hog trade. Total hog inventory in the U.S. and Canada increased 3% from last year, confirming what was already known in the industry: that growing supplies will keep the pipeline full and ample product available. Pork cutouts posted sharp losses following a $27-per-cwt loss in belly cuts. Pork cutout values fell $4.92 per cwt, moving to $74.07 per cwt on 432 loads. CME cash lean index for 8/23 is $74.50, down $1.44. DTN Projected lean index for 8/26 is $73.52, down $0.98. 

WEDNESDAY'S CASH HOG CALL: Steady to $2 lower. Pressure once again in futures trade limited underlying support. With growing supply levels available to the market, there continues to be increased weakness through the entire complex. Wednesday slaughter numbers are expected at 482,000 head. Saturday runs are expected at 62,000 head.

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