GENERAL COMMENTS:
Renewed support moved into cattle trade Tuesday morning with feeder cattle futures now taking the leadership role as November contracts are holding $2 per cwt gains at midday. Even with the underlying concern that feeder cattle numbers may still be higher than year-ago levels through the rest of the year, the focus on an oversold market last week is helping rekindle buying interest in all contracts. Live cattle futures are showing firm support, but most of these gains are based primarily on feeder cattle strength and represented in triple-digit price moves in deferred contract months. Hog futures are mostly lower following Monday's market shift lower. December corn is down 2 1/2 cents per bushel following the crop report and December soybean meal is down $2.20 per ton. The Dow Jones Industrial Average is up 393 points with Nasdaq up 213 points.
LIVE CATTLE:
Buyer support in live cattle futures remains strong Tuesday morning, although upward price shifts have been more limited than expected during early trade. October and December contracts have been able to etch out 40- to 70-cent gains through most of the morning, although the underlying support moving back into feeder cattle trade is helping spark additional gains in spring 2022 contract months. Traders are finally focusing on the fact that last week's losses in both live cattle and feeder cattle futures were well overstated and are willing to step back into the market. Given the current market condition, without further major disruptions in the industry, it is likely that seasonal lows have been set in live cattle trade. But regaining the significant market losses seen during September will still be a challenge. With beef values still trying to find support levels, and uncertainty as to just how tight cattle supplies will be through the upcoming months, traders are likely to try to find stability within the bottom half of the recent trading range. This current mentality could make it extremely challenging for spot October contracts to hold sustained prices above $125 per cwt. Cash cattle activity is still quiet Tuesday morning with asking prices starting to develop in the South around $125 per cwt. Asking prices are still illusive in the North and may remain hard to pin down through most of the day. Packer interest is likely to slowly improve through the rest of the day, but it is very possible trade may be delayed until Wednesday or later. The upward push in futures trade is catching the attention of feeders, who are expected to try to take advantage of further market shifts, hoping to make up for lost ground in the cattle market over the last month.
Tuesday morning's boxed beef prices are mixed in moderate trade, with choice cuts $0.32 lower at $288.86 and selects up $3.78 at $268.94 on a total count of 111 loads. Dow Jones estimated Tuesday's cattle slaughter at 121,000 -- steady with a week ago and 2,000 more than year ago levels.
FEEDER CATTLE:
Further gains have developed in feeder cattle futures Tuesday morning. November futures are moving back above $157 per cwt and have posted a $4.20 per cwt gain over last week's lows, creating additional optimism that further buyer support will steadily move into the market at the current price range. Feeder cattle futures are still not out of danger of follow-through liquidation, but the farther prices move away from recent support levels, the more confidence buyers will have to slowly step back into the market. The CME Feeder Index was priced at $152.53 for Oct. 1.
LEAN HOGS:
Further price pressure has moved into lean hog futures with December and February holding $1 per cwt losses at midday. The turn lower in the market has not yet triggered concerns of widespread market liquidation as traders are still adjusting from the upward moves last week. It is still expected that momentum in the market last week was overstated and it will still take several days for the market to become more stable. With a $12 per cwt price gap in nearby contracts over the last two weeks, the potential for additional wide market shifts within this range is likely. The ability for December contacts to hold above $80 per cwt in the upcoming days will likely spark another round of light but supportive buying during October. Renewed strength in ham cuts helped push pork cutout values firmly higher Tuesday. Cutouts are up $4.55 at $116.95 Tuesday morning on 182.51 loads. Negotiated hog prices are $0.98 lower at 71.29 per cwt on 4,158 head. The swine/pork market formula price is listed at $93.17 per cwt. Dow Jones estimated Tuesday's hog slaughter at 477,000 -- 1,000 more than a week ago and 12,000 less than year ago levels. The CME Lean Hog Index is listed at $94.11 per cwt for Oct. 4.
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