GENERAL COMMENTS:
Hog futures continued to find willing buyers
Tuesday with nearby trade focusing on the potential for China buying
support. Although no official news of pork trade has yet been seen,
traders anticipate additional sales to China will help stimulate market
support. Cattle trade remained stuck in a narrow range Tuesday on a
combination of follow-through buying and limited position-taking
following Monday's rally. Cash cattle markets remain quiet with bids
unavailable Tuesday afternoon. This is not unexpected, as most bids may
be delayed until sometime Wednesday or later. Asking prices have slowly
developed through the day with cattle initially priced at $104 to $105
per cwt live basis in the South and $170 dressed in the North. Feedlot
managers seem to remain comfortable elevating asking prices given the
recent support in futures trade and tighter supplies from last week's
Cattle on Feed report. But the uncertainty about how many cattle packers
need to fill early October needs could keep cash markets delayed until
late in the week. The National Daily Direct afternoon hog report was
$1.29 higher ($39-$48, weighted average $45.88) with total volume
reported at 22,934 head. Corn prices continued higher Monday despite
limited activity with December closing up 1 1/2 cents. Stock markets are
lower, giving back initial gains despite light trade. The Dow closed
154 points lower with the NASDAQ down 112 points.
LIVE CATTLE
Futures closed mixed, $0.27 higher to $0.35
lower. Livestock traders needed more time to ruminate on Monday's
triple-digit rally as the focus moved away from cattle numbers and
cattle placements to upcoming supply and demand of beef. Most traders
showed limited interest in Monday's USDA Cold Storage report with prices
bouncing on both sides of unchanged through most of the session. After
nearby contracts reached their highest level since early August, their
next move will depend on whether there is enough support to continue
pushing contracts higher, or if uncertain fourth-quarter beef demand and
still-strong supplies will once again limit market momentum. It is
uncertain whether any clear answers will be revealed through the rest of
the week as outside markets may be the biggest attraction to cattle
traders. Beef cutouts: lower, down $1.18 (select, $189.66) and down
$1.06 (choice, $215.39) with moderate demand and heavy offerings, 136
loads (63 loads of choice cuts, 39 loads of select cuts, 18 loads of
trimmings, 16 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL
Steady. Despite limited asking prices, the
direction of cash business remains undeveloped, as bids may not be seen
until midweek or later. This could put more emphasis on wholesale beef
market direction and futures shifts in the next couple of days.
FEEDER CATTLE
Futures closed $0.35 lower to $0.75 higher.
Traders returned Tuesday morning much less optimistic after Monday's
triple-digit gains. Although the focus remains on tighter cattle
supplies going into next year, the lack of incentive for buyers to
actively move into the complex could lead to a sideways trading range
through the end of the month. CME cash feeder index for 9/23 is $139.80,
up $0.12.
LEAN HOGS
Futures closed $0.20 lower to $1.05 higher. Firm
support redeveloped in nearby lean hog futures trade Tuesday morning,
on continued hopes that China will purchase more U.S. ag products ahead
of planned trade talks between the two countries in October. Although
most of the focus and news chatter has been about possible soybean
sales, the expectation is that pork sales will not be far behind due to
China's need to fill its pork demand. Deferred futures lost their early
week momentum as traders view the latest developments as more short-term
focused, with long-term questions still to be answered by a potential
trade agreement. Pork cutouts shifted lower on widely mixed primal
values. Pork cutout values fell $0.44 per cwt, moving to $69.74 per cwt
on 386 loads. CME cash lean index for 9/20 is $55.13, down $0.67. DTN
Projected lean index for 9/23 is $54.82, down $0.31.
WEDNESDAY'S CASH HOG CALL
Steady to $1 higher. Futures gains and packers
searching to fill aggressive plant output have led to steady-to-firm hog
markets midweek. Most bids are expected to remain steady to 50 cents
higher, although limited long-term direction is still expected.
Wednesday slaughter numbers are expected at 486,000 head. Saturday runs
are expected at 254,000 head.
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