Tuesday Midday Livestock Market Update - Continued Support Seen in Cattle Futures

GENERAL COMMENTS:

Active gains aggressively moved into cattle trade Tuesday morning. The firm support in several outside markets has sparked underlying noncommercial buyer support to move back into the oversold and previously pressured cattle market. November feeder cattle futures are very lightly traded as traders are focusing on limited activity in this contract, but otherwise all contract months are posting sharp triple-digit gains at midday. The last couple of days is not enough to right the ship when it comes to recent market pressure, but for now, it appears that buyer support has looked past last week's bearish turn lower and is gaining momentum and potential higher prices in the near future.

Lean hog futures trade is weak Tuesday morning as traders stepped back from Monday's gains, but the tone of the market remains generally positive and could help spark follow through fundamental support during the month of November. December corn is steady and December soybean meal is down $0.01 at $469.10. The Dow Jones Industrial Average is up 465.32 at 34,803.19.

LIVE CATTLE:

Live cattle futures have gained follow-through buyer support with prices surging $2 to $3 per cwt higher through most of the morning. Spot December contracts are holding gains of $2.35 per cwt, with February futures leading the complex higher. Given the aggressive pressure in the market last week, even these active price gains are not enough to bring live cattle markets back to previous levels, but this is helping distance market prices from short-term lows, creating the potential for follow through buyers to remain comfortable stepping back into the market.

Traders will be closely focusing on outside market moves, as the 500-point gain in the Dow Jones Index Tuesday morning was a huge shot in the arm for overall economic support. But the upcoming cattle on feed report Friday is also expected to play into traders' positions through the week. On feed numbers are estimated at 102.1% year ago levels. Cash cattle trade remains extremely quiet with asking prices and bids still undeveloped. It very likely could be the end of the week before active cash trade starts to develop.

December live cattle are $1.73 higher at $176.65, February live cattle are $2.43 higher at $177.675, April live cattle are $2.23 higher at $179.675. Boxed beef prices are lower: choice down $1.86 ($295.99) and select down $1.50 ($267.74) with a movement of 87.59 loads (39.47 loads of choice, 20.70 loads of select, 10.48 loads of trim and 16.94 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have moved higher during Tuesday morning trade. Although at midday, prices are starting to erode from session highs, the underlying firmness across the cattle complex continues to hold. The morning release of cattle on feed estimates has started to soften previous market support with the average analyst estimates of placement in the November report at 107% of year-ago levels. This could add some volatility to nearby feeder cattle trade through the next couple of days. November feeders are $0.50 lower at $230.225, January feeders are $0.93 higher at $229.225 and March feeders are $1.75 higher at $231.825.

LEAN HOGS:

Lean hog futures have softened during morning trade with traders pulling back from early week gains. Nearby contracts closed slightly above previous short-term resistance levels Monday afternoon, but the overall tone and fundamental structure has created some concerns about the ability to push prices significantly higher at this point. This pullback is not expected to lead to active market liquidation, but is focusing more on the ability for traders to take positions and readjust market holdings at the current market levels. Little new technical or fundamental market information is likely to develop in the next couple of days, potentially leaving markets comfortable moving back and forth within the current price range. December lean hogs are $0.88 lower at $72.475, February lean hogs are $0.83 lower at $76.2 and April lean hogs are $0.70 lower at $81.925.

Hog Prices are lower on the Daily Direct Morning Hog report, down $1.72 with a weighted average of $64.22, ranging from $60.00 to $66.00 on 270 head with a five-day rolling average of $68.00. Pork Cutouts totaled 181.28 loads with 159.79 loads of pork cuts and 21.49 loads of trim. Pork cutout values are down $0.60 at $87.04.