GENERAL COMMENTS:
Aggressive buyer support flooded the cattle markets Tuesday, breaking away from the sharp and active losses that have developed over the last few trading sessions. The light holiday trade hovering over the market through the Thanksgiving break seems to have brought renewed optimism with increased overall volume as traders get back to work and focus on the upcoming market activity before the next big holiday of Christmas.
Triple-digit gains held in all nearby livestock trade and pushed live cattle and feeder cattle futures to aggressive gains at closing bell. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.42 with a weighted average of $58.43 on 10,761 hogs. December corn closed down 4 at $4.515 and January soybean meal closed down $6.10 at $430.5. The Dow Jones Industrial Average is up 83.51 at 35,416.98.
LIVE CATTLE:
Live cattle futures quickly and aggressively changed course Tuesday as active buyer support moved into all contracts. Unlike recent market rallies where buy orders seemed to quickly fade as the trading session continued, Tuesday's market seemed to gain momentum as the day continued. April futures led the complex higher, closing at $4.20 per cwt, while February and June futures closed $4 per cwt higher for the day. This moved prices away from 9-month contract lows in each of these markets, and quickly focused on the severely oversold market status.
The fact that sluggish holiday volume has ended helped to bring additional market interest back into not only nearby contract months but also deferred futures contracts. Cash cattle have broken away from the tradition of trading late in the week following the Thanksgiving break. Light to moderate trade has developed in the South at $175 per cwt. This is steady with Monday's light trade, but $2 per cwt lower than last week's weighted average. It is still too early to tell if the sharp rally in futures trade will change the overall market direction as the week continues, or if enough cattle will have been sold to effectively set the trend for the week.
Activity in the north remains quiet with bids and asking prices undeveloped. Both sides are closely watching where futures trade opens Wednesday morning, as this could help to set the direction for any additional trade needed for the week. December live cattle closed $2.88 higher at $171.65, February live cattle closed $4.00 higher at $172.825 and April live cattle closed $4.20 higher at $174.875.
Tuesday's slaughter is estimated at 123,000 head, 2,000 head less than a week ago and 5,000 head less than a year ago.
Boxed beef prices closed mixed: choice up $0.92 ($298.17) and select down $1.45 ($266.35) with a movement of 164.03 loads (90.45 loads of choice, 39.50 loads of select, 15.59 loads of trim and 18.49 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Steady with Tuesday trade. Despite the aggressive futures rally developing Tuesday, the fact that trade is seen for two straight days in the South at $175 per cwt may set the tone for the week. Beef price and futures market direction early Wednesday could be a bigger indicator of late week cash price movement if it changes from current values.
FEEDER CATTLE:
The feeder cattle futures market was the main event Tuesday with active buyer support flooding into the market. Spot January futures closed $8.25 per cwt. Following sharp losses last week and follow-through pressure on Monday, the cattle complex remains extremely oversold, bringing about renewed momentum and buyer support. The limit gain in feeder cattle contracts has allowed for expanded trade limits in feeder cattle futures Wednesday with a new limit for the Wednesday session of $12.25 per cwt.
It is uncertain just how much follow-through support will return to the complex at the opening bell, but the expansion of price trade on the positive side is a significant and positive change from the recent market pressure hovering over the feeder cattle market over the last two months. It is still uncertain how the swift price shifts will impact cash feeder cattle trade, as the light holiday week trade last week has still not fully worked through cash markets due to the limited activity. January feeders closed $8.25 higher at $221.05, March feeders closed $7.20 higher at $223.5 and April feeders closed $7.20 higher at $227.425. The CME Feeder Cattle Index for November 24: down $3.42, $226.96.
LEAN HOGS:
Lean hog futures played follow the leader to the cattle markets Tuesday, with the good fortune of sharply higher live cattle and feeder cattle benefiting nearby lean hog contract prices the most. December through April futures posted triple-digit gains, helping to back away from contract lows seen earlier in the week, although there remains significant fundamental and technical uncertainty within the market. Traders continue to look for increased market support in both pork values and cash hog prices heading into the Christmas holiday and end of the year. There will also be increased focus on the weekly export sales report to determine just how much movement is developing and the potential ability to improve export movement in the near future.
December lean hogs closed $1.05 higher at $68.925, February lean hogs closed $2.10 higher at $69.025 and April lean hogs closed $1.38 higher at $75.00. Tuesday's hog slaughter is estimated at 485,000 head, 1,000 head less than a week ago and 1,000 head less than a year ago. Pork Cutouts totaled 358.12 loads with 311.61 loads of pork cuts and 46.51 loads of trim. Pork cutout values are down $3.95 at $84.8. The CME Lean Hog Index for November 24: down $1.27, $72.33.
WEDNESDAY'S HOG CALL: Steady. Despite the early week pressure in cash hog values and pork cuts, the futures market rally and return to normal "full week" schedules by packers are expected to help stabilize cash values midweek.
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