GENERAL COMMENTS
Cash cattle markets remain generally sluggish
late Tuesday with just a few token bids have developed in the South.
These early bids are set at $114 per cwt, and likely not going to gain
any attention from feedlot managers at this point in the week. Asking
prices are still hard to pin down in most areas, although more
definition should develop through the day Wednesday. According to the
closing report, the national hog base is $0.72 lower compared with the
prior day settlement ($51-$59.20) weighted average $58.15. The corn
futures moved lower in light activity. March futures were 1 cent lower
Tuesday. The Dow Jones Index is 134 points higher with the Nasdaq down
10 points.
LIVE CATTLE
Triple-digit gains developed in most contract
months with firm market support seen across the entire market ($0.87 to
$1.42 higher). Once traders moved back into the market following the
recent pullback in all cattle markets, strong gains quickly flooded into
nearly all contracts. Even though prices closed with triple-digit gains
in most markets, the pullback from session highs is putting more
emphasis on the potential for additional market support later in the
week. Beef cut-outs: mixed, $0.26 higher (select, $185.92) and down
$1.47 (choice, $204.06) with light-to-moderate demand and offerings (63
loads of choice cuts, 24 loads of select cuts, 30 loads of trimmings, 17
loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL:
Steady. Activity early Wednesday is expected to
be quiet as the overall lack of direction following the strong futures
rally may limit overall interest in both sides. The fact that The Fed
Cattle Exchange Auction will trade Wednesday morning could give some
additional definition to the complex, although active trade is not
expected until later in the week.
FEEDER CATTLE:
Aggressive and active buying flooded into the
market with feeder cattle futures posting triple-digit gains Tuesday
($0.87 to $1.97 higher). The ability for traders to not only move back
into the cattle market Tuesday but to become so active and push prices
nearly $2 per cwt higher in many nearby contracts is sparking widespread
underlying support in all markets. There is additional follow-through
buyer interest that may quickly develop midweek as traders try to build
off of the recent success. CME cash feeder index for 12/11 is $153.89
down $0.43.
LEAN HOGS:
Firm pressure redeveloped in lean hog futures as
most contracts turned lower ($0.62 Lower to $0.15 higher). Front-month
December contracts were the only contract to pull out a gain at the end
of the trading session due to overall light activity in spot month
trade. The rest of the market posted losses as nearby contracts traded
in a uniform pattern of 50 to 60 cents per cwt lower. The overall lack
of support follows the triple-digit losses seen Monday as traders
continue to quickly back away from strong market support seen last week.
Carcass values weakened Tuesday solely on the aggressive $11-per-cwt
loss in belly values, while all other primals posted strong triple-digit
gains. Pork cut-out: $81.12 down $0.57. CME cash lean index for 12/8
$65.17, down $0.31. DTN Projected lean index for 12/11 $64.97 down
$0.20.
WEDNESDAY'S CASH HOG CALL:
Steady to $1 lower. Early trade Wednesday
morning is expected to follow the same trend seen early in the week with
bids ranging from steady to $1 per cwt lower, although the general tone
of the market is likely to be steady to weak. Packers will continue to
have ready access to market ready hogs and the fact that many processors
are at or near capacity through the day is likely to limit overall cash
markets. The recent pullback in futures trade also has put a damper on
the ability for cash markets to remain stable. Plant runs are expected
to hit 465,000 once again with a total of 241,000 expected Saturday.
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