GENERAL COMMENTS:
Feeder cattle were the only livestock market tempted to test higher prices off and on through Tuesday, but a higher close in corn ultimately took away that temptation. The bulk of the bearishness focused on lean hogs, with clearly lower momentum on the chart attracting a high volume of trend-following traders. Afternoon hog prices were unavailable due to packer submission issues. March corn is up 2 1/2 cents per bushel and January soybean meal is down $2.90 per ton. The Dow Jones Industrial Average is up 492.4 points and NASDAQ is up 479.5 points.
LIVE CATTLE:
Most live cattle contracts closed lower Tuesday. December live cattle closed $0.05 higher at $138.225, February live cattle closed $0.425 lower at $139.225 and April live cattle closed $0.425 lower at $142.45. Faltering boxed beef prices in the early half of this week could be making futures traders hesitant to pursue fresh new highs just yet, but bear in mind that wholesale and retail beef prices remain historically strong and margins for packers remain favorable. The cash cattle market is seeing asking prices around $140 to $142 in the North and $145 in the South, aiming for another $3 weekly gain like last week, but the showlists were relatively large Monday and we'll have to remain in suspense about how this shakes out until real trade develops later in the week.
Tuesday's slaughter is estimated at 123,000 head, slightly stronger than a week and year ago.
Boxed beef prices closed lower: choice down $4.50 ($268.03) and select down $2.17 ($255.68) with a movement of 159 loads (83.8 loads of choice, 36.42 loads of select, 11.7 loads of trim and 26.6 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady to $2.00 higher. Some may argue that with packers having committed 24% of last week's purchases for the deferred delivery that they aren't going to pushed into paying higher prices this week. It's equally as important to highlight that with packers running vigorous processing speeds their need for cattle is greater than normal as well.
FEEDER CATTLE:
January feeders closed $0.225 lower at $165.025, March feeders closed $0.475 lower at $167.475 and April feeders closed $0.525 lower at $170.20. Slightly higher corn prices and slightly lower beef prices Tuesday weren't encouraging any fresh pursuit of contract highs in the feeder cattle futures market but, overall, feeding margins still pencil out positively, and demand for feeder cattle at sale barns should be expected to remain strong. The logistics may get jammed up by trucker availability (just like in every other industry these days), but at least there aren't widespread weather problems to add to the challenges. The CME Feeder Cattle Index for Dec. 06: up $0.53, $160.96.
LEAN HOGS:
Most lean hog contracts spent the whole Tuesday trading session showing triple-digit losses. December lean hogs closed $0.025 higher at $72.075, February lean hogs closed $1.675 lower at $76.55 and April lean hogs closed $1.60 lower at $82.05. The U.S. hog market would need some big, fresh push of foreign buying to pull it out of the bearish trend-following funk it's gotten into this week, to remind traders of the fundamental global strength for pork demand. At this moment, however, that kind of action doesn't seem to be forthcoming. Meanwhile, daily hog slaughter at 470,000 was 10,000 below week-ago numbers and 23,000 below year-ago numbers, with hog weights that have been trending higher, eroding producers' market power. Spooked futures traders kept up a heavy volume of selling action throughout the session. The afternoon pork cut-out report was delayed due to packer submission issues. The CME Lean Hog Index for Dec. 03: up $0.25, $70.78.
WEDNESDAY'S CASH HOG CALL: Lower. With packers having bought a plethora of hogs in last week's cash market, it's unlikely that they are aggressive in this week's trade.
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