Tuesday Closing Livestock Market Update - Traders Worry the Complex is Overbought Which Sent the Contracts Lower

GENERAL COMMENTS:

It was a quiet day for the livestock complex as the board struggled as traders worried about the markets being overbought, which consequently led to all three of the markets rounding out the day lower. Asking prices are noted in the South at $189 to $190 but remain unestablished still in the North. December corn is down 7 cents per bushel and December soybean meal is down $3.50. The Dow Jones Industrial Average is down 324.80 points.

LIVE CATTLE:

It was a lackluster day for the live cattle complex, though boxed beef prices closed higher. Traders were more concerned with the market's technical position than they were with assessing how fundamental support was encouraging. We knew that at some point traders were likely going to liquidate some of their positions from the market as technically speaking the market is overbought. This is likely the main reason why we're currently seeing the downtrend in cattle even though all fundamental indicators remain supportive. The next real question that the market must answer is -- how much lower does the market become before traders feel comfortable with their positions? October live cattle closed $1.52 lower at $186.72, December live cattle closed $1.40 lower at $186.52 and February live cattle closed $1.30 lower at $187.40. No cash cattle trade developed throughout the day but asking prices are noted at $189 to $190 in the South but are still unestablished in the North. 

Tuesday's slaughter is estimated at 125,000 head -- 1,000 head more than a week ago and 2,000 head less than a year ago.

Boxed beef prices are higher: choice up $3.51 ($316.83) and select up $2.99 ($292.09) with a movement of 136 loads (82.06 loads of choice, 27.65 loads of select, 6.14 loads of trim and 19.76 loads of ground beef).

WEDNEDSAY'S CATTLE CALL: Steady. Given that packers were able to buy some cattle with time last week likely means that prices will be steady this week with the reduction in throughput.

FEEDER CATTLE:

The feeder cattle complex endured a mixed day as the market's technical and fundamental indicators moved in opposite directions. Throughout the day the board struggled considerably as traders wanted the live cattle contracts to trade lower and react exaggeratively. Meanwhile, feeder cattle demand in the countryside continues to be exceptional. More than anything, today's weakness throughout the board for both the live cattle and feeder cattle contracts seem to be a technical reset as traders know the market is somewhat technically overbought and are reacting upon that realization. October feeders closed $2.60 lower at $246.52, November feeders closed $3.10 lower at $246.47 and January feeders closed $3.37 lower at $244.22. At Joplin Regional Stockyards in Carthage, Missouri compared to last week, feeder steer sunder 525 pounds sold $2.00 to $10.00 higher and heavier weights sold steady to $3.00 lower. Feeder heifers sold anywhere from $5.00 lower to $6.00 higher. Feeder cattle supply over 600 pounds was 64%. The CME feeder cattle index 10/14/2024: down $0.72, $249.89.

LEAN HOGS:

The lean hog complex drifted lower throughout the day as the market felt the same technical pressure that the cattle complex also endured, but then was disappointed with the day's lower close in pork cutout values. December lean hogs closed $0.57 lower at $75.22, February lean hogs closed $0.52 lower at $79.30 and April lean hogs closed $0.40 lower at $83.80. Unfortunately, most of the cuts on the afternoon cutout report showed weaker closes which isn't a good sign of consumer demand. It's likely that the complex could pressure again on Wednesday as traders are desperately going to need fundamental reassurance and currently the market isn't producing much fundamental confidence. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $2.33 with a weighted average price of $76.80 on 4,410 head. Pork cutouts totaled 416.39 loads with 335.62 loads of pork cuts and 80.77 loads of trim. Pork cutout values: down $0.57, $94.40. Tuesday's slaughter is estimated at 487,000 head -- 3,000 head more than a week ago and 6,000 head more than a year ago. The CME lean hog index 10/11/2024: down $0.13, $84.16.

WEDNEDAY'S HOG CALL: Steady. It's likely that packers will need to buy moderately again in Wednesday's market as they haven't purchased many hogs this week.

Tuesday Midday Livestock Market Summary - Technical Pressure Sends Complex Lower

GENERAL COMMENTS:

The livestock complex is enduring some pressure as the market nears Tuesday's noon hour. More than anything, the market seems to be liquidating from a technical sense as traders believe the complex is somewhat overbought. December corn is down 5 1/2 cents per bushel and December soybean meal is down $3.30. The Dow Jones Industrial Average is down 68.30 points.

LIVE CATTLE:

Traders seem to think Tuesday needs to be a downward trending day as the live cattle market is trading more than $1.00 lower in all contracts. One could point to the market's stronger boxed beef prices and say market fundamentals should be strong enough to support steady price; but given that the futures complex is technically overbought, we knew some trader liquidation was likely to come regardless of market fundamentals. October live cattle are down $1.55 at $186.70, December live cattle are down $1.62 at $186.30, and February live cattle are down $1.50 at $187.17. Asking prices are noted at $189 to $190 in the South but remain unestablished still in the North. No cash cattle trade is expected to develop ahead of Wednesday at the absolute earliest.

Boxed beef prices are higher: choice up $3.04 ($316.36) and select up $2.68 ($291.78) with a movement of 73 loads (38.78 loads of choice, 16.87 loads of select, 6.14 loads of trim and 11.46 loads of ground beef).

FEEDER CATTLE:

The feeder cattle complex is also feeling some significant technical pressure as the market is currently trading anywhere from $2.00 to $3.00 lower. This obviously pushes the spot November feeder cattle contract back below its 100-day moving average. Unless the live cattle market changes its tune and direction, It's likely feeders will continue to trade in this dreary manner through the day's end. October feeders are down $2.12 at $247.00, November feeders are down $2.97 at $246.60, and January feeders are down $2.87 at $244.72.

LEAN HOGS:

Earlier Tuesday the lean hog complex was trading higher but as the noon hour nears, the lean hog complex is seeming to absorb some of the same pressure the cattle contracts are enduring. December lean hogs are down $0.12 at $75.67, February lean hogs are steady at $79.82, and April lean hogs are down $0.02 at $84.17. Also not helping matters is the fact that morning cutout values are slightly lower and again cash prices aren't visible because not enough hogs have traded.

The projected CME Lean Hog Index for 10/14/2024 is down $0.08 at $84.08, and the actual index for 10/11/2024 is down $0.13 at $84.16. Hog prices are unavailable on the Daily Direct Morning Hog Report because of confidentiality. However, we can see that just 1,485 head have traded and that the market's five-day rolling average now sits at $75.52. Pork cutouts total 250.99 loads with 190.08 loads of pork cuts and 60.91 loads of trim. Pork cutout values: down $0.08, $94.89.

Tuesday Morning Livestock Market Update - Traders Uncertain of Further Strength

GENERAL COMMENTS:

Cattle futures were in limbo Monday as traders spent the day assessing the market's potential this week. The weakness of grain futures provided some support as feed prices are expected to remain reasonable. This may remove some urgency to move cattle quickly this week, allowing feedlots to hold for no less than steady cash and hopefully higher prices as demand for beef seems to be improving. Boxed beef was higher Monday with choice up $2.10 and select up $0.38. The packers have been holding back on slaughter to improve margins, but higher beef demand needs to be satisfied. Lower feed prices and tighter supplies of cattle leave feedlots with better leverage. Higher cattle weights are not a problem in the current market environment.

Hog futures took a hit Monday. The October contract ceased trading with traders seeing no need to close the gap between the expiring October and the December contract. December is the lead month and was hit the hardest, nearly eliminating the gains of the previous two days. The price action is concerning as the momentum may be running out of steam. Cash was slightly higher on the National Dairy Direct Afternoon Hog report with a gain of $0.13. Cutouts were higher but nothing to write home about posting a gain of $0.50. The market needs to see consistent demand to maintain the uptrend. Traders are concerned that consistency may not unfold. Packers are expected to be more aggressive in the cash market Tuesday as they will need to increase purchases to maintain slaughter.

	BULL SIDE		BEAR SIDE
1)	The strength of boxed beef indicates good demand and that good demand will need to be satisfied. The packers may need to pay more for cattle to meet that demand.	1)	The packers may hold the line on cash this week as they feel feedlots need to sell cattle they have held back the past weeks before gaining even more weight.
2)	The feedlots will be looking for higher cash this week as packers do not have many cattle purchased ahead and demand is good.	2)	Cattle futures are overbought and may have a price correction if there is any negative news that might impact the market.
3)	Hog slaughter remains strong, continuing to keep supplies current. This should continue to support prices.	3)	Hog futures will need to find buying interest Tuesday or there could be further liquidation as the market corrects from being overbought.
4)	The packers did not purchase many hogs on Monday and should step up more aggressively Tuesday as they want to purchase supplies earlier in the week.	4)	The lack of consistency in cash and cutouts may leave traders cautious over upside potential, triggering some profit-taking.

Monday Midday Livestock Market Summary - Mixed Tones Summarize Complex

GENERAL COMMENTS:

The livestock complex is trading mixed into Monday's noon hour as the cattle contracts are pushing slightly higher while the hog complex dips lower. It will be imperative that demand is strong this week as traders need fundamental reassurance in all of the markets. December corn is down 5 1/4 cents per bushel and December soybean meal is up $2.70. The Dow Jones Industrial Average is up 194.18 points.

LIVE CATTLE:

With the continued support of stronger boxed beef prices, the live cattle complex is trading mostly higher into Monday's noon hour. Last week the market's fundamentals were extremely supportive as, not only were boxed beef prices higher throughout the majority of the week, but the cash cattle market traded steady to $1.00 higher too. Once again, this week traders will desperately need the market's fundamentals to continue to trade in a supportive manner if the board is going to maintain its position at these higher price points. October live cattle are down $0.10 at $188.50, December live cattle are up $0.62 at $188.20, and February live cattle are up $0.67 at $188.87. New showlists appear to be mixed, higher in Nebraska and Colorado, but lower in Kansas and Texas.

Last week Southern live cattle traded at mostly $187, which is $1.00 higher than the previous week's weighted average, and Northern dressed cattle traded at mostly $296, which is fully steady with the previous week's weighted average. Last week's negotiated cash cattle trade totaled 92,611 head. Of that 80% (74,479 head) were committed to the nearby delivery while the remaining 20% (18,132 head) were committed for the deferred delivery.

Boxed beef prices are higher: choice up $1.59 ($312.81) and select up $1.73 ($290.45) with a movement of 32 loads (19.23 loads of choice, 5.99 loads of select, zero loads of trim and 7.22 loads of ground beef).

FEEDER CATTLE:

Upon seeing the nearby corn contracts trading $0.05 to $0.07 cheaper and the live cattle market rallying yet again, the feeder cattle complex is trading higher into Monday's noon hour as well. It's interesting to note that the contracts currently with the biggest gains for the day are the March and April 2025 contracts, which could be indicative that traders are noting supplies are going to be incredibly thin during that time. October feeders are down $0.10 at $249.65, November feeders are up $0.70 at $250.50, and January feeders are up $0.95 at $248.20.

LEAN HOGS:

Even though midday pork cutout values are higher, the lean hog complex is trading mostly lower as traders are concerned about domestic consumer support following last week's weaker demand. December lean hogs are down $1.82 at $75.82, February lean hogs are down $1.35 at $79.80, and April lean hogs are down $0.92 at $84.25. Unless traders see better consumer demand this week, the market could potentially trade lower as it's currently at its highest price point in the last four months.

The projected CME Lean Hog Index for 10/11/2024 is down $0.13 at $84.16, and the actual index for 10/10/2024 is down $0.18 at $84.29. Hog prices are unavailable on the Daily Direct Morning Hog Report because of confidentiality. However, we can see only 229 head have traded and the market's five-day rolling average now sits at $75.52. Pork cutouts total 149.91 loads with 125.08 loads of pork cuts and 24.38 loads of trim. Pork cutout values: up $1.88, $96.35.