GENERAL COMMENTS:
Livestock futures saw a technical reversal Tuesday morning, sparking renewed buyer support in cattle and hog futures. Buying is becoming established given the recent oversold status of the complex. Cash cattle markets remain quiet Tuesday afternoon with limited interest from either side. A few bids are reported in Nebraska at $100 per cwt live basis, while limited asking prices are seen at $168 to $170 dressed in the North. At this point, both sides appear unwilling to pull the trigger given the midday turnaround in futures, and the potential long-term shift this could bring to the cattle complex. The National Daily Direct afternoon hog report was $1.72 lower (45-$50.50 per cwt, weighted average $48.93) on 15,628 head. Corn prices posted strong late-day gains with December up 7 1/4 cents. Stock markets were mixed in light trade with the Dow up 40 points and the NASDAQ down 28 points.
LIVE CATTLE:
Futures closed $1.67 to $2.05 higher. Following early morning pressure, the tone of the market changed and buying activity flooded back into the complex. Traders again focused on the potential for small factors to have a large impact, such as increased hopes of progress on a China trade deal, which sparked interest in all markets. The rally was also helped by the fact that the entire live cattle complex has been extremely oversold, and building pressure over the last month had left buyers ready and waiting to step back into the market. But in order to sustain Tuesday's gains, there needs to be follow-through buying the rest of the week, as traders are still faced with uncertain demand growth while cattle numbers remain elevated. Beef cutouts: lower, down $0.94 (select, $200.98) to down $1.57 (choice, $225.38) with light demand and light-to-moderate offerings, 121 loads (66 loads of choice cuts, 32 loads of select cuts, 10 loads of trimmings, 13 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL:
Steady to lower. Cash cattle markets remain undeveloped with increased asking price and bid activity likely through Wednesday. Packers and feeders will continue to monitor early futures trade moves Wednesday, potentially sparking increased interest.
FEEDER CATTLE:
Futures closed $0.92 to $1.90 higher. Gains swept through feeder cattle futures as traders overlooked support in the grain trade and focused exclusively on the market surge in live cattle. CME cash feeder index for 9/9 is $136.44, down $1.33.
LEAN HOGS:
Futures closed mixed, $0.07 lower to $1.82 higher. Sharp early losses in lean hog futures gave way to triple-digit gains at midday. The December contract traded in a $5-per-cwt range during the session. Renewed expectations for a trade agreement between China and the U.S. helped to spark the late-day rally. Although the renewed life being seen in the complex is encouraging, we have seen markets swing higher in the past on hopes of renewed trade talks only to see optimism fizzle out. Pork cutout values gained $0.08 per cwt, moving to $71.99 per cwt on 424 loads. CME cash lean index for 9/6 is $63.75, down $0.93. DTN Projected lean index for 9/9 is $62.99, down $0.76.
WEDNESDAY'S CASH HOG CALL:
Steady to $2 lower. Despite the late-day rally in futures Tuesday, cash hog markets are expected to remain generally weak. Packers continue to gain access to market-ready hogs at steady-to -lower prices due to the current supply available. Most bids are expected to remain steady to weak. Wednesday slaughter numbers are expected at 484,000 head. Estimated runs Saturday are at 193,000 head.
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