GENERAL COMMENTS:
Cattle futures stole the show once again as active trade interest developed in both live cattle and feeder cattle markets during the Tuesday session. Given the fact that cattle trade has been so severely oversold over the past several weeks, it is no shock that prices are able to make significant progress in just a short time. Feeder cattle futures were the highlight of the session, although the inability to post gains in all live cattle futures at the closing bell seems to be creating some renewed uncertainty as to how much additional gains can be expected. Hog futures closed mixed following early market weakness, traders still are trying to find market stability following the emotionally driven and likely overly aggressive gains last week. Hog prices moved lower on the National Direct Afternoon Hog Report in moderate trade, falling $0.75 with a weighted average of $71.26 on 5,533 head. December corn is down 3 1/4 cents per bushel and December soybean meal is down $2.40 per ton. The Dow Jones Industrial Average is down 390 points and NASDAQ is down 193 points.
LIVE CATTLE:
Firm early support in live cattle trade helped spark follow-through buyer interest in all contracts. Although nearby futures seemed hard pressed to maintain early day gains, the focus on active feeder cattle gains seemed to bring renewed interest to late-month contracts. December live cattle futures closed lower, falling 20 cents per cwt despite trading higher most of the session. Strong gains held in spring and summer 2022 contract months, with the focus on continued strong beef demand in domestic and export markets while tighter supplies of cattle are still projected during the next year. It is uncertain just how much of a pullback in production will be seen over the coming months, but this could help spark steady buying interest in both nearby and deferred contracts. The ability to hold early week gains will be crucial in helping to strengthen overall market support as the month of October continues. October live cattle closed $0.20 higher at $122.82, December live cattle closed $0.20 lower at $127.85, and February live cattle closed $2.37 at $132.52. Cash cattle markets are quiet Tuesday afternoon with bids still undeveloped in all areas. It is likely that packer interest may slowly improve through the afternoon, but this still may not be enough to spark any feedlot manager activity at this point. It is likely that trade will be delayed until at least Wednesday and maybe even later in the week. Given the strength in futures trade, anything less than last week's average will likely be considered a significant disappointment and will likely have feeders holding out until at least Thursday or even Friday. Asking prices in the South appear to be at $125 per cwt, but it is still hard to pin down northern asking prices at this point. The CBP Texas Cash pool reported 290 head sold at $124.15. Other bids were at $123.50 per cwt.
Tuesday's slaughter is estimated at 122,000 head, 5,000 more than a week ago and 2,000 more than year ago totals.
Boxed beef prices closed mixed: choice down $1.47 ($287.71) and select up $2.62 ($267.78) with a movement of 171 loads (92.8 loads of choice, 27.26 loads of select, 17.89 loads of trim and 32.93 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. Following nearly two months of steadily sliding cash cattle prices, the potential stability in beef values and recent gains in futures trade may help to end this unfortunate trend with steady to firm packer purchases for the week. Trade may start Wednesday but could trickle in through the rest of the week.
FEEDER CATTLE:
Feeder cattle futures took the spotlight Tuesday as traders returned to the market and expanded Monday's upward market shift. November futures led the complex higher with a $1.85 per cwt rally, although prices backed away from session highs at the closing bell due to end of the day market adjustments. The ability to push and hold prices above the $155 per cwt price level is expected to create technical support through the e complex over the near future. It is still uncertain just how many noncommercial buyers will come running back to the feeder cattle market at this point, but the focus on steady interest developing in all cattle trade is likely to help instill further market support in the coming days. It is hopeful that with the early October market rally seen in both live cattle and feeder cattle markets, seasonal lows have been set and well established, but there remains some looming uncertainty about just how much higher cattle inventories will grow, and if this will limit upward market moves over the month of October and November. October feeders closed $1.10 higher at $156.10, November feeders closed $1.85 higher at $156.87 and January futures closed $1.72 higher at $157.27. The CME Feeder Cattle Index for Oct. 3: $152.79, up $0.26.
LEAN HOGS:
Lean hog futures closed mixed in a narrow to moderate price shift Tuesday following early losses that created concerns that further widespread pressure would develop during the week. Following active triple-digit losses, traders are looking for a price point to rally around as market volatility starts to turn into longer-term market direction. December through April futures fell 30 to 55 cents per cwt, but given the aggressive market rally over the last two weeks, and specifically the gains seen last week, the overall tone of the market remains extremely bullish if current price levels can hold. It is still likely that additional pressure may trickle into the market over the next few days, as current volatility in cash and pork cutout values seem to be having a hard time confirming the recent price rally, but traders will not only focus on short-term market needs, but potential supply issues that may plague the hog industry through most of 2022. October lean hogs closed $0.17 higher at $90.97, December lean hogs closed $0.55 lower at $82.55, and February lean hog futures closed $0.50 lower at $85.00. Pork prices shifted moderately lower following mixed price moves in individual primal cuts and sharp losses in ham cuts. Pork cutouts totaled 341.51 loads with 306.14 loads of pork cutouts and 35.37 loads of trim. Pork cutout values: down $4.27, $108.13. Tuesday's slaughter is estimated at 476,000 head, 5,000 more than a week ago and down 14,000 from a year ago. The CME Lean Hog Index for Oct. 3: up $0.06, $94.11.
WEDNESDAY'S CASH HOG CALL: Steady. Packers continue to be able to fill expected processing schedules without significant efforts even though tighter hog supplies will continue to be a factor for an extended period of time. This will likely limit near-term cash market support, despite the recent support seen in futures trade and some pork values.
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