GENERAL COMMENTS:
Feeder cattle futures are the only livestock market moving in the opposite price direction from Monday's trade. Feeder cattle traders are focusing on the fact that emotional trade Monday may have overstated downward market pressure, while also adjusting price levels to lower corn markets Tuesday. Hog futures remain generally bullish; gains are firm, but nowhere as aggressive as seen Monday. The potential to build underlying stability across the entire livestock market in the next couple of days could help bring additional -- but needed -- buyer support back to the table heading into the month of October. December corn is down 4 1/2 cents per bushel and December soybean meal is down $0.80 per ton. The Dow Jones Industrial Average is down 438 points with Nasdaq down 390 points.
LIVE CATTLE:
Narrow losses have developed Tuesday as the live cattle complex has seemingly been immune to the post-report market volatility seen in all other livestock trade. Nearby contracts are posting uniform losses of 5 to 22 cents per cwt with December contracts showing the most activity -- and also the most price pressure of the complex. The lack of market movement Monday and Tuesday seems to indicate traders have already adjusted to increased cattle inventory levels in the last six weeks. The aggressive market pressure in nearby contracts based on uncertainty of long-term demand and exiting of noncommercial traders, points to market prices at or near support levels. Cash cattle markets are quiet Tuesday morning, which is not unusual at all. Bids are still undeveloped in all areas, but it would not be surprising if a few starter bids appear before the end of the day. Asking prices on live Southern cattle are around $125 per cwt but asking prices in the North are still unavailable. It is likely most trade will be pushed off until Wednesday or later, the price volatility in most markets will likely add some uncertainty to cash markets over the next couple of weeks. But packers are still expected to be in the market for moderate amounts of cattle moving into early October.
Tuesday morning's boxed beef prices are mixed in light trade, with choice cuts $0.33 lower at $302.37 and selects up $1.63 at $276.01 on a total count of 81 loads. Dow Jones estimated Tuesday's cattle slaughter at 121,000 -- 1,000 more than a week ago and 3,000 more than year ago levels.
FEEDER CATTLE:
Buyers have slowly but steadily stepped back into the feeder cattle complex Tuesday as bearish report news seems to have slightly overstated market pressure early in the week. October and November contracts are holding $1 per cwt gains, but price pressure may still hold given recent increases in feeder cattle placements. It is important to remember the reports deal with historical data. In this situation, placement levels are as of Sept. 1, nearly a month ago. It is important to keep things in perspective and understand that placements in August were higher than nearly anyone thought, but current market situations also point to steady demand for feeder cattle as more cattle are sold into feedyards due to the seasonal cycle. It will be interesting to compare Sept. 1 data with Oct. 1 data and determine if this trend of increased placements continues through the entire season. A firm pullback in corn prices Tuesday is also helping add to firm but limited buyer support in nearby feeder cattle trade, as traders try to lock in margins before they place cattle in feedyards. The CME Feeder Index was priced at $153.98 for Sept. 24.
LEAN HOGS:
Light to moderate buyer support is trickling back into the lean hog complex Tuesday morning following limit gains Monday. Traders are still trying to sort out exactly what the short- and long-term implications are to the much tighter inventory situation revealed in the Hogs and Pigs report. The report is quarterly, compared to most other ag and livestock reports which are monthly, so it gives a much less clear picture of how the hog industry is adjusting to market conditions. But given the uncertainty surrounding demand from China for U.S. pork in the coming year, significant further upside market potential could be temporarily limited. Wide market swings in wholesale pork prices on a daily basis are also adding to the confusion, creating less clarity between market volatility and the demand-driven direction of the market. Spot October contracts are holding narrow gains, while other nearby contracts are trading 50 to 90 cents higher at midday. Cutouts are up $1.63 at $113.58 Tuesday morning on 190.97 loads. Negotiated hog prices are $0.99 lower at $75.14 per cwt on 3,757 head. The swine/pork market formula price is listed at $92.53 per cwt. Dow Jones estimated Monday's hog slaughter at 475,000 -- steady with a week ago and 15,000 less than year ago levels. The CME Lean Hog Index is estimated at $91.51 for Sept. 24.
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