GENERAL COMMENTS:
Strong early gains in feeder cattle futures has helped reduce the sting of the sharp losses seen over the past three trading sessions. The underlying movement of the market in the last several days has left the cattle complex unsupported, but still fundamentally oversold, allowing for the current volatility in the market.
After trading at the lowest price levels since last spring in nearby contracts, prices feeder cattle prices have moved above last week's support levels. The ability to sustain buyer support through the rest of the week will be very important in helping to break the negative market cycle which has pushed prices sharply lower in the last three months.
Live cattle futures remain higher, but the overall lack of support in beef and cash cattle values may make it hard to stimulate active support in the near term. Lean hog futures remain moderately lower with traders erasing early week gains in most contract months. March corn is up 2 at $4.875 and January soybean meal is up $4.60 at $412.9. The Dow Jones Industrial Average is down 108.63 at 36,095.81.
LIVE CATTLE:
Live cattle trade has sustained early positivity through the morning Tuesday, although limited overall buyer support has been able or willing to trickle into the complex at this point. Following the volatile up and down shifts across the complex over the past few weeks, traders seem to need more than a one-day price bounce before any significant underlying support develops across the market.
February live cattle futures are leading the market higher with a 75 cent per cwt gain, but this is still leaving markets near long-term support levels in nearby contracts and very vulnerable to additional selling pressure through the end of the week. The holiday season is quickly approaching, which may also limit additional market support before the end of the year.
Cash cattle markets are silent with asking prices and bids unavailable at this point. It is expected that trade will be delayed until midweek or later, with the potential for a late week movement in cash cattle activity this week. December live cattle are $0.88 higher at $168.125, February live cattle are $0.80 higher at $167.875, April live cattle are $0.65 higher at $170.35.
Boxed beef prices are lower: choice down $0.91 ($294.08) and select down $4.19 ($258.64) with a movement of 87.81 loads (43.66 loads of choice, 24.00 loads of select, 10.28 loads of trim and 9.87 loads of ground beef).
FEEDER CATTLE:
Strong, triple-digit gains have aggressively moved into the feeder cattle futures with spot January contracts holding gains above $4 per cwt at midday. This is a welcome relief to the sharp losses seen over the past few days, but just to move prices away from long-term support levels and multi-month lows is still not able to create the needed confidence to spark further active buying across the entire complex.
Traders are looking for the potential to bring additional buyer support back into the market through the rest of the week, potentially distancing market prices from current levels, and hopefully building technical support across the entire complex.
January feeders are $3.70 higher at $214.225, March feeders are $3.60 higher at $217.175 and April feeders are $3.65 higher at $221.075.
LEAN HOGS:
Lean hog futures have backed away from early week gains with moderate to firm price pressure seen at midday. Nerby contracts are holding losses of $1 per cwt, while trades continue to focus on the recent softness in pork values and erosion of cash hog values. December contracts remain under pressure, but extremely lightly traded, with most focus on February futures. The ability to keep February contracts at or near the $70 per cwt price level seems to be the key to technical support through nearby lean hog futures contracts. Limited volume is expected to be seen in the near future, which may limit additional market movement not only the rest of Tuesday, but through much of the week.
December lean hogs are $1.05 lower at $67., February lean hogs are $1.18 lower at $69.625 and April lean hogs are $1.30 lower at $76.25.
Hog Prices are lower on the Daily Direct Morning Hog report, down $2.26 with a weighted average of $53.96, ranging from $48.00 to $57.00 on 4,398 head with a five-day rolling average of $57.16. Pork Cutouts totaled 213.54 loads with 189.91 loads of pork cuts and 23.63 loads of trim. Pork cutout values are up $1.38 at $84.23.
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