Tuesday Closing Livestock Market Update - Lean Hog Futures Continue to Shift Lower

GENERAL COMMENTS:

Cattle trade took steps sideways Tuesday with limited market direction developing in live or feeder futures. Mixed price moves continue to keep most traders on the sidelines, content to wait for outside markets to show a more definite direction over the next couple of trading sessions. Hog futures posted firm losses once again. Although prices are still holding above support, the concern surrounding global pork demand and China's ability to handle economic concerns is putting pressure on nearby and deferred lean hog trade. Hog prices moved lower on the National Direct Afternoon Hog Report in light trade, falling $1.18 with a weighted average of $78.14 on 6,370 head. December corn is down 4 3/4 cents per bushel and December soybean meal is down $2.00 per ton. The Dow Jones Industrial Average is down 50 points and NASDAQ is up 32 points.

LIVE CATTLE:

Sluggish trade developed in live cattle futures Tuesday. The limited movement left nearby contracts focusing on the lack of underlying support from beef values, while limited buyer support trickled into deferred contracts. The overall focus on gains in 2022 feeder cattle contracts and continued pressure in grain trade helped stimulate price support in April through October 2022 contracts. October live cattle closed $0.32 lower at $122.45, December live cattle closed $0.27 lower at $127.80 and February live cattle closed $0.05 lower at $131.47. Cash cattle trade remains at a complete standstill and likely will stay sluggish until at least late Wednesday. Given the Cattle on Feed report Friday, there is potential for cash trade to be dragged out through the end of the week. Packers should start to show some interest Wednesday, although if active movement in futures or beef values is seen, feeders may be unwilling to take initial bids.

Tuesday's slaughter is estimated at 122,000 head -- 2,000 more than a week ago and steady with year ago totals.

Boxed beef prices closed higher: choice up 1.19 ($315.66) and select up $1.00 ($280.75) with a movement of 84loads (40.40 loads of choice, 20.81 loads of select, 9.37 loads of trim and 13.41 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Steady. Limited interest in cash cattle markets continues to delay activity levels until midweek or later. Packer interest may start to improve Wednesday, but it easily could be Thursday or Friday before active trade is seen.

FEEDER CATTLE:

Feeder cattle futures closed mixed Tuesday with limited volume as traders seem to be comfortable on the sidelines as they wait for outside market drama to play out. Although outside markets posted a firm early day gain from Monday's aggressive losses, the certainty that optimism would quickly return to the market seemed to fade as the day continued. Feeder cattle futures seem to be driven by short- and long-term timelines, with nearby contracts posting narrow losses based on buyers holding out of the market. Deferred feeder cattle trade sparked moderate to firm momentum during the session Tuesday, gaining as much as 57 cents per cwt in March futures. This is partially driven by the continued pressure in grain trade, directly impacting production costs for upcoming months. It is also expected that long-term tightness of feeder cattle supplies will be a major focus. But given seasonal selling just around the corner, most of this tightness will not be realized until late winter or early spring. September feeders closed $0.15 lower at $154.85, October feeders closed $0.05 lower at $156.62 and November feeders closed $0.32 lower at $156.95. The CME Feeder Cattle Index 9/20/2021: $153.77, up $0.02.

LEAN HOGS:

Despite stability in stock prices and cattle trade Tuesday, lean hog futures continue to show underlying weakness with nearby contracts holding 60 to 65 cent per cwt losses at closing bell. Although traders slowly moved away from session lows seen during the morning, the concern that longer-term market pressure may continue through much of 2022 created uncertainty in both commercial and noncommercial traders. The economic concerns developing in China and how this will impact overall spending by the country -- specifically pork demand -- is not only impacting short-term hog prices but will have a spillover effect into most of next year's demand. October lean hogs closed $0.60 lower at $84.37, December lean hogs closed $0.62 lower at $73.6, and February lean hog futures closed $0.35 lower at $76.70. Pork prices rallied higher Tuesday afternoon with strong gains in ham and belly cuts. Pork cutouts totaled 262.45 loads with 247.64 loads of pork cutouts and 14.81 loads of trim. Pork cutout values: up $4.03, $106.92. Tuesday's slaughter is estimated at 467,000 head -- 14,000 less than a week ago and down 19,000 from a year ago. The CME Lean Hog Index 9/20/2021: down $0.47, $93.57.

WEDNESDAY'S CASH HOG CALL: Steady to $1 lower. Continued pressure in lean hog trade and concern that further market softness may develop in both the short- and long-term are likely to limit packer spending through the rest of the week.