GENERAL COMMENTS:
The livestock complex endured a bit of a setback through Tuesday's market as the contracts seemed to distance themselves from the rest of the outside markets, which performed exceptionally well. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $10.17 with a weighted average of $92.77 on 20,744 head. December corn is up 2 1/4 cents per bushel and December soybean meal is down $3.80. The Dow Jones Industrial Average is up 825.43 points.
LIVE CATTLE:
The live cattle complex started the day off stronger, but as time ticket by, the market grew less and less appealing to traders and consequently closed lower, even though the larger commodity market had a stellar day. The nearby live cattle contracts weren't able to cling to the market's recent uptick, but the deferred contracts managed to still close mostly higher. October live cattle closed $0.12 lower at $144.20, December live cattle closed $0.52 lower at $147.50 and February live cattle closed $0.30 lower at $151.25. The day's lower tone isn't something that gravely concerns me as it seems like a mild pullback after closing stronger on Monday. Now, if the market closed like the lean hog complex did, taking out its recently developed support plane, then I'd be singing a different tune. But given that feedlots are eager to trade cattle and have their eyes set on higher prices, thanks to the support of stronger boxed beef prices, I tend to think the market could be straightening out. The cash cattle market didn't see much develop throughout the day as feedlots are determined to get cattle sold for more money this week.
Tuesday's slaughter is estimated at 128,000 head, steady with a week ago and 6,000 head more than a year ago.
Boxed beef prices closed higher: choice up $2.10 ($248.04) and select up $0.60 ($221.91) with a movement of 99 loads (57.54 loads of choice, 19.75 loads of select, 3.12 loads of trim and 18.60 loads of ground beef). The choice/select spread sits at $26.13.
WEDNESDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. There's no denying that packers are sweating over margins, which is something that they haven't had to do over the past two years, but given the uptick in boxed beef prices and how current showlists are, I think feedlots stand a strong chance at getting cattle sold higher this week.
FEEDER CATTLE:
The feeder cattle market didn't like the sight of slightly higher corn prices and traded bitterly throughout most of Tuesday's market. The complex opened stronger, but as time passed, the market grew hesitant as corn posted a mild advance, and with the live cattle contracts lending no support, the market had little ground to stand on. Feeder cattle demand throughout the countryside has been hit or miss as buyers as limited with options given that there isn't much grazing to be had this fall. October feeders closed $0.87 lower at $174.65, November feeders closed $0.85 lower at $175.20 and January feeders closed $0.95 lower at $176.07. At Imperial Auction Market in Imperial, Nebraska, compared to last week, steers sold $2.00 to $8.00 higher and heifers traded anywhere from $2.00 to $20.00 stronger. Feeder cattle supply over 600 pounds was 22%. The CME Feeder Cattle Index for Oct. 3: up $0.23, $175.67.
LEAN HOGS:
Sometimes finding a rhyme or reason as to why something happens in a market feels like an act of God, that was a perfect summary for the lean hog complex Tuesday. Were cash prices supportive? Yes. Was it expected that pork cutout values would close lower given that Monday's big push largely stemmed from a pump in belly prices? Yes. And did the market start the day off strong? Yes, it actually ran to $79.15 in the December contract before submitting to pressure and closing beneath the recently develop support plane. December lean hogs closed $3.30 lower at $74.42, February lean hogs closed $2.82 lower at $77.27 and April lean hogs closed $2.37 lower at $83.30. Despite the odd developments throughout the futures market, it was rather impressive to see the volume of pork cuts that sold and to see the cash market trade $10.17 higher on over 20,000 head. Pork cutouts totaled 354.25 loads with 310.38 loads of pork cuts and 43.87 loads of trim. Pork cutout values: down $1.64, $98.29. Tuesday's slaughter is estimated at 487,000 head, 4,000 head more than a week ago and 8,000 head more than a year ago. Monday's hog slaughter was revised to 465,000 head. The CME Lean Hog Index for Sept. 30: down $0.58, $94.33.
WEDNESDAY'S CASH HOG CALL: Steady. Given that the futures market faced stiff pressure, packers could step back from the cash market to assess things.
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