Tuesday Midday Livestock Market Summary - Cattle Markets Stabilize

GENERAL COMMENTS:

Strong follow-through pressure is developing in lean hog futures trade with December contracts leading the complex lower with a $1.30 per cwt loss. Growing uncertainty about economic strength in China is impacting the pork and hog markets more directly than other livestock markets. Cattle futures are mixed to mostly higher in light trade volume. The pressure in corn over the last two days, combined with active buyer interest in stock markets, is helping to draw buyers back into the live and feeder cattle complex. December corn is down 5 cents per bushel and December soybean meal is up $2.10 per ton. The Dow Jones Industrial Average is up 144 points with Nasdaq adding 98 points.

LIVE CATTLE:

Given all the uncertainty and fireworks seen early Monday, live cattle futures seem to have shrugged off most of the outside market volatility and have traded in a narrowly mixed price range Tuesday. Prices continue to hover between 10 cents lower and 22 cents higher with very limited volume. The lack of direction in cash trade and no significant news in beef demand changes through early September seems to have brought temporary market stability to the complex. Nearby live cattle futures remain just above support levels set last week. The ability to hold these price points through the end of the month would likely spark increased interest and draw renewed noncommercial trade back into the complex. Traditionally, seasonal lows are set through the middle of September, helping create incentive for traders to look for firming demand and higher prices in 4th quarter trade. Cash cattle trade still remains undeveloped with feeders and packers showing very little interest at this time. Asking prices are likely to be seen near $124 and higher in the South and $202 and higher dressed in the North; active bids may not start to surface until midweek or later. With the Cattle on Feed report being released Friday afternoon, there is a small chance some trade may hold out until after the report, although the movement of futures trade and interest by packers over the next two days will be the main focus of cash cattle trade. 

Tuesday morning's boxed beef prices are lower in moderate trade, with choice cuts $0.56 lower at $315.10 and selects down $1.09 at $279.66 on a total count of 96 loads. Dow Jones estimated Tuesday's cattle slaughter at 120,000 -- 3,000 higher than a week ago and 2,000 less than year ago levels.

FEEDER CATTLE:

Feeder cattle futures appear to be "treading water" Tuesday morning with limited direction. Although some market support is seen from the firmness in outside markets, there remains concern surrounding the ability to entice noncommercial traders back into the complex. Early losses in corn prices led to initial price moves across the feeder cattle complex Tuesday morning. But the depth of buyer support remains limited, allowing for nearby contracts to slip slightly lower, now holding 7- to 17-cent losses in remaining 2021 contract months. Very little direction is likely to be seen across the feeder cattle complex over the next couple of hours, likely leaving prices mixed in a narrow range at closing bell. The CME Feeder Index was priced at $153.75 for Sept. 17.

LEAN HOGS:

Continued pressure is seen in lean hog futures trade Tuesday morning despite renewed optimism in stock markets as traders unravel a portion of the pressure seen Monday. Concern that longer-term weakness in pork demand and the entire hog market will not be as quickly offset as other markets is creating follow-through pressure in all contracts. December futures are leading the market lower with a $1.30 per cwt loss, sparking additional concerns that last week's market lows may be tested once again in the near future. The rest of the complex is hovering between 60 and 90 cents per cwt lower with increased underlying pressure developing across the entire complex. Given that the main concern of Monday's losses focused on how China would react to economic pressure, pork demand and exports to China continue to be uncertain if further economic pressure is seen in China. Cutouts are up $4.03 at $106.92 Tuesday morning on 262.45 loads. Negotiated hog prices are unreported at this time due to packer submission issues. Dow Jones estimated Tuesday's hog slaughter at 463,000 -- 12,000 less than week ago, while 23,000 less than year ago levels. The CME Lean Hog Index is estimated at $93.57 for Sept. 20.