GENERAL COMMENTS:
Aggressive losses developed in live cattle and feeder cattle trade Tuesday afternoon following nearby live cattle futures breaking through price support established on Oct. 26. The recent buyer support over the last couple of weeks has quickly eroded in both live cattle and feeder cattle trade with traders once again focusing on technical market pressure developing in early November. Even though live cattle futures sparked the shift move lower over the last two days, feeder cattle have posted the most aggressive losses, falling over $10 per cwt in spot November contracts.
Lean hog futures avoided the bloodbath in cattle trade, but backed away from early support, while still able to produce narrow to moderate gains in most contracts. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.58 with a weighted average of $68.07 on 9,441 hogs. December corn closed down 8 3/4 at $4.685 and December soybean meal closed up $9.90 at $447.4. The Dow Jones Industrial Average is up 56.74 at 34,152.60.
LIVE CATTLE:
Sharp losses developed late Tuesday following an active shift lower and continued selling during morning trade. The move below short-term price support levels established on Oct. 26 led to additional active liquidation in all contracts. December futures still closed at the lowest price since May, but the market was led lower by a $4 per cwt loss in April contracts. Technical pressure is the focus of the most recent market shift, but it will be interesting how overall beef market fundamentals will follow this trend lower in the next several days. Cash cattle activity remains dead silent as both sides are more than happy to wait on the sidelines given the sharp losses in futures trade over the last two days. Bids and asking prices are understandably quiet and for good reason, as neither side wants to be the first to put a foot on base in this recent market slide.
December live cattle closed $2.55 lower at $178.775, February live cattle closed $3.55 lower at $178.425 and April live cattle closed $4.00 lower at $180.6.
Tuesday's slaughter is estimated at 125,000 head, steady with a week ago and 3,000 head less than a year ago.
Boxed beef prices closed lower: choice down $1.34 ($300.38) and select down $0.88 ($269.48) with a movement of 206.78 loads (139.20 loads of choice, 28.11 loads of select, 18.90 loads of trim and 20.57 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Steady to $2 lower. Cash cattle markets are expected to remain quiet early Wednesday, but without some market stability it is hard to imagine that prices will be anything but lower.
FEEDER CATTLE:
Just when it appeared the cattle complex was on a firm path of redeveloping buyer support, active pressure flooded into the cattle market over the last two days. Feeder cattle futures were most affected by the downward price spiral, as the most significant losses developed in the last two hours of trade Tuesday when price levels broke through support levels set in late October. This sparked active liquidation at the end of the trading session, on one hand limiting selling activity and potentially keeping markets from closing limit lower. On the other hand, the emotion of the market was cut short, also limiting the opportunity for buyers to step back into the complex once initial selling pressure subdued.
Traders will closely monitor early moves Wednesday, as this could easily set the direction of trade for the week and potentially for much of November. November feeders closed $4.95 lower at $232.225, January feeders closed $5.60 lower at $230.825 and March feeders closed $5.85 lower at $233.25. The CME Feeder Cattle Index for Nov. 3: down $0.03, $238.89.
LEAN HOGS:
Lean hog futures closed steady to higher Tuesday, and for the second consecutive day, moving opposite of the cattle complex. Following underlying support based on fundamental growth in the pork complex helped to keep markets positive, although the overall negative vibe of the entire livestock complex did reduce gains from early trade levels. December lean hogs closed $0.50 higher at $72.9, February lean hogs closed $0.08 higher at $76.025 and April lean hogs closed steady.
Tuesday's hog slaughter is estimated at 489,000 head, 2,000 head more than a week ago and 0 head less than a year ago. Pork Cutouts totaled 351.38 loads with 311.39 loads of pork cuts and 39.99 loads of trim. Pork cutout values are down $3.84 at $87.77. The CME Lean Hog Index for Nov. 3: down $0.22, $76.23.
WEDNESDAY'S HOG CALL: Steady to $1 lower. Despite the ability for lean hog futures to remain steady to higher this week, the limited but evident pressure in pork values and cash values will likely soften cash bids midweek.
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