GENERAL COMMENTS:
Strong market gains flooded cattle futures Tuesday morning with triple-digit price moves holding through the entire session. Feeder cattle contracts led the complex higher with gains of $3.40 per cwt seen in 2022 contract months. The ability to continue to push prices higher midweek will be closely monitored and will have a significant impact on buyer interest Wednesday morning. Hog futures posted early gains, but quickly reverted to the overshadowing market weakness that has been so evident through most of the livestock market in the last few weeks. Hog prices moved lower on the National Direct Afternoon Hog Report in active trade, falling $0.41 with a weighted average of $84.07 on 10,983 head. December corn is up 7 cents per bushel and December soybean meal is down $3.40 per ton. The Dow Jones Industrial Average is down 333 points and NASDAQ is down 83 points.
LIVE CATTLE:
Live cattle futures bounced higher Tuesday as traders not only became encouraged on news that the Grand Island, Nebraska, beef plant would be in operation Tuesday, but the aggressive losses over the last three weeks has left the complex oversold. Tuesday's shift higher was the most significant support that the live cattle complex has seen since mid-August, which is before hitting contract highs in all nearby futures trade. Since that time, prices have moved steadily lower with traders unable to find any sense of short- or long-term support. February live cattle futures led the complex higher with gains of $2.82 per cwt Tuesday, but there remains questions if follow-through buyer support can redevelop early Wednesday. In order for this market shift to be viewed as anything more than "position taking," buyers are going to have to string together two or three days of positive price moves, which makes early trade Wednesday so important on the future direction of the cattle complex. October live cattle closed $1.85 higher at $124.12, December live cattle closed $2.50 higher at $129.65, and February live cattle closed $2.82 higher at $133.25. Cash cattle interest is still quiet with packers and feeders showing little interest. Asking prices and bids are undeveloped in all areas, which is not surprising given the volatility in futures trade over the last couple of days. It is likely that active trade will be delayed until Wednesday or later. Trade did develop on the CBP Cash Pool Tuesday, which reported 295 head sold at $124 per cwt. Other bids were seen at $122 to $123 per cwt.
Tuesday's slaughter is estimated at 120,000 head, 1,000 less than a week ago and 2,000 less than a year ago.
Boxed beef prices closed lower: choice down $3.04 ($322.89) and select down 1.54 ($290.62) with a movement of 136 loads (75.32 loads of choice, 24.95 loads of select, 7.26 loads of trim and 28.89 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. The strong triple-digit rally in futures trade and stability in morning boxed beef values is helping to improve market philosophy. If this is enough to limit market pressure by the end of the week in cash markets is very uncertain, but the outlook is better today than it has been over the last week. Trade interest is expected to remain quiet during the morning with limited interest possible as the day continues.
FEEDER CATTLE:
Feeder cattle futures surged higher Tuesday, regaining all of Monday's losses and then some. Although this market shift does very little to change the overall tone of the weaker market, a two-day price shift accounts market swings of $5 to $6 per cwt across nearby and deferred contract months. There's potential that Tuesday's market shift will become even more significant as this could very well signal a change in market trend and establish price support near $152 per cwt in spot month contracts. However, in order for this to be develop, buyers will need to actively move back into the market Wednesday morning. If buyer support is undeveloped and prices continue lower through the rest of the week, the bearish market trend will continue, and this Tuesday market bounce will be looked at as nothing more than position covering on a "turnaround Tuesday." The positive shift in live cattle trade during the session may make a significant difference in a mental change through the entire cattle market and especially feeder cattle futures. September feeders closed $3.07 higher at $155.27, October feeders closed $2.70 higher at $158.15 and November feeders closed $2.57 higher at $159.72. The CME Feeder Cattle Index for Sept. 13: $154.39, down $0.70.
LEAN HOGS:
Lean hog futures found early support Tuesday following the market rally that developed in cattle trade. This helped push prices higher through the first half of the session, but buyer interest eroded in the last two hours of trade, moving prices from firm to moderate gains to triple-digit losses in most contract months once again. The underlying bearish tone across the lean hog futures complex is creating questions of the ability to establish market support in the near future. December lean hog futures posted the lowest close since February, creating the potential that further market pressure could develop in the next couple of weeks. Volatility and wide price swings in cash hog prices and pork cutout values through the last couple of weeks is adding to the concern by many technical and fundamental traders. October futures continue to hold a $8 per cwt premium to the December contract, which is starting to indicate that further cash market pressure may develop during the fourth quarter of 2021. The concern is that first quarter 2022 price direction typically follows the direction of late year trade movements, pointing to longer-term market pressure in the next few months. October lean hogs closed $0.40 lower at $80.37, December lean hogs closed $1.20 lower at $72.17 and February lean hog futures closed $1.00 lower at $75.75. Pork prices bounced higher following strong gains in ham cuts Tuesday. Pork cutouts totaled 409.16 loads with 370.31 loads of pork cutouts and 38.85 loads of trim. Pork cutout values: up $4.08, $105.20. Tuesday's slaughter is estimated at 481,000 head, 12,000 more than a week ago and down 2,000 from a year ago. The CME Lean Hog Index for Sept. 13: down $0.63, $96.77.
WEDNESDAY'S CASH HOG CALL: Steady to $1 lower. The inability for lean hog futures to hold early gains despite morning report support is causing concern that further cash market pressure will be evident as the week continues.
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