Tuesday Closing Livestock Market Summary - Cattle Futures Close Higher, But Well Off Session Highs

GENERAL COMMENTS

The feedlot trade remained at a standstill Tuesday with just a few bids of $126 noted in parts of the South. Our guess is cattle sellers will start out pricing showlists around $130 or better on a live basis. According to the closing report, the national hog base is .33 lower ($56.50-63.75, weighted average $62.52). Old-crop corn closed 2 cents higher, supported by further reports of dry conditions in Argentina. The stock market closed lower thanks in part to the fear of rising interest rates. The Dow settled 299 points lower while the Nasdaq lost 91.

LIVE CATTLE

This was one session that bulls would have preferred to ring the closing bell. While live contracts settled 10 to 62 points higher, April, June, and August slipped more than 100 points below session highs. On the other hand, April through August continue to respect general trendlines as defined by 40-day and 100-daying moving averages. Spot Feb is scheduled to expire at noon Wednesday. Beef cut-outs: higher, up .07 (select: $214.79) to $1.00 (choice: $220.52) with light to moderate demand and moderate offerings (66 loads of choice cuts, 31 loads of select cuts, five loads of trimmings, 16 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 higher. Bids and asking prices could become better defined at midweek, but significant trade volume may not surface until Thursday or Friday.

FEEDER CATTLE:

Although most contracts managed to save triple-digit gains Tuesday (i.e., up 95 to 130), they continue to struggle for support in the wake of last Wednesday's crash. The stability of August probably looks the best in that regard, finding decent support where 40-day and 100-day moving averages converge (i.e., near 150.30). CME cash feeder index: 02/26: 147.76, off .54.

LEAN HOGS:

Lean futures closed mixed, up 40 to off 27. Spot April closed flat, trapped by both the discount of the cash index and rather towering overhead resistance at both the 40-day and 100-day moving averages. While the technical profiles of summer issues are nothing to take to the state fair, they continue to find at least token support near longer-term support lines (e.g., August settled Tuesday above its 40-day moving average. Pork cut-out: $79.53, off .74. CME cash lean index for 02/23: 69.32, off .46 (DTN Projected lean index for 02/26: 68.83, off .49).

WEDNESDAY'S CASH HOG CALL:

Steady to $1 lower. Opening hog bids in the morning are likely to be some weaker thanks to Tuesday's large country run and softening carcass value.

Tuesday Midday Livestock Market Summary - Cattle Futures Hold Firm Gains

GENERAL COMMENTS: 

Firm buyer support is moving into the cattle complex, which is likely to draw additional buyer support back to the table. This may firm underlying market shifts, and help to mobilize commercial buyers who have remained generally comfortable on the sidelines. Lean hog futures posted narrow market shifts through the morning. Corn prices are higher in light trade. March corn futures are 1 cent higher Tuesday. Stock markets are lower in light trade. The Dow Jones is 61 points lower while Nasdaq is down 45 points.

LIVE CATTLE:

Light to moderate buyer support is holding through the entire live cattle complex with prices ranging from 25 to 80 cents per cwt. The overall lack of follow through gains early in the session when prices were $1 per cwt higher in most nearby contracts is likely to limit follow through support late Tuesday. This could add some uncertainty to the entire complex. Cash cattle activity remains generally sluggish with just a few scattered bids developing in the South. Bids are seen at $126 per cwt, which is well expected for this time of week. Asking prices that have been floated are seen at $130 in the south. Asking prices and bids are unavailable in the North at this time for both live and dressed markets. It is expected to be midweek or later before active interest develops. Boxed Beef cut-outs at midday are higher, $0.04 higher (select) and up $0.74 per cwt (choice) with light movement of 84 total loads reported (46 loads of choice cuts, 22 loads of select cuts, 5 loads of trimmings, 12 loads of ground beef).

FEEDER CATTLE:

Firm buyer support is moving through the feeder cattle complex with traders focusing on increased buyer support leading the entire cattle complex higher. Prices have moved back from strong triple digit gains of near $2 per cwt higher early in the session, although firming support near $1 per cwt higher seems to be the move that most traders are willing to make at midday. The focus on additional moves in live cattle trade as well as potential firmness in outside markets could bring some late-day buying back into the complex.

LEAN HOGS:

Mixed trade is seen across the complex with prices hovering in single-digit price moves in nearby trade. This overall lack of direction is helping to build some stability following previous pressure, but is unable to bring back a sense of buyer support given the lack of overall strength in the market. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.28 at $63.13 per cwt with the range from $56.50 to $63.50 on 9,390 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up $0.45 at $63.24 per cwt with the range from $58.00 to $63.50 on 2,070 head reported sold. The National Pork Plant Report posted 191 loads selling with carcass values falling $0.34 per cwt. Lean hog index for 2/22 is at $69.78, down 0.39 with a projected two-day index of $69.32, down 0.46.

Tuesday Morning Livestock Market Update - Pressure Expected Early Tuesday

GENERAL COMMENTS:

Follow-through pressure is expected to slowly develop early Tuesday morning with traders focusing on the inability to bring any stability back into nearby contracts Monday. This continues to have more impact on nearby live cattle contracts and the entire feeder cattle market with April live cattle futures within striking distance of breaking through short-term support levels. Moderate early losses would break through February lows, and create some underlying pressure through the entire complex. This may limit the potential for follow-through buying as liquidation continues across the complex. Cash cattle markets are expected to remain undeveloped across the complex with traders looking for increased overall activity through the rest of the week. Bids and asking prices are still likely to remain overall sluggish with limited direction seen through the complex until later in the week.

The continued pullback in lean hog futures has created additional market uncertainty through the end of the month. Nearby contracts have not pushed prices nearly $1.50 per cwt off of recent highs, which is opening the door for additional liquidation through the next several trading sessions. The potential for additional support to trickle into cash and pork cutout levels is helping to draw additional underlying support across the market, which may add even more support to the long-term direction of the market. Cash hog values are expected to still remain steady to weak with early bids likely to range steady to $1 per cwt lower once again as packers attempt to regain processing margins. Given the recent firmness of the market, most early bids and sales are likely to be seen steady to weak. Daily procurement levels are targeted at 465,000 head Tuesday.

	BULL SIDE		BEAR SIDE
1)	Strong underlying support quickly developed through the boxed beef market early in the week. This is creating additional underlying support, which is pushing choice boxed beef levels near $220 per cwt. The continued support in the beef values is focusing on the long-term demand expected to be building across the complex.	1)	Renewed pressure in both live cattle and feeder cattle futures has created underlying market weakness through the complex. Nearby live cattle futures quickly followed the shift lower in feeder cattle. This pressure is limiting any need or desire for traders to move back into the complex over the next couple of sessions.
2)	Firm buyer activity which redeveloped in deferred live cattle futures is helping to draw additional support through the complex. This may add even more support to the overall trade volume in the complex through the next couple of trading sessions.	2)	The increased placement levels of cattle through the month of January continue to limit overall market stability as traders are faced once again with the reality that aggressive beef levels will be available through the rest of the year. This is limiting both short-term and long-term price support.
3)	Cash hog prices bounced higher late Monday, creating the expectation that some additional market firmness may continue to trickle into fundamentals through the end of the week.	3)	Despite the bounce higher in overall pork cutout values Monday, the increased volatility in primal cuts and wide ranging price swings through the complex is creating some significant uncertainty about the ability to continue to move pork prices higher through the end of the month.
4)	Moderate gains were seen in pork cutout values early in the week. This is helping to draw additional support to the market as traders focus on the ability to move pork product during the spring months as the potential to increased overall movement domestically and in export markets will likely help to sustain recent gains.	4)	Lean hog futures continue shift lower through the week, limiting the potential for additional buyer support moving into the complex. Although prices are still far away from breaking through support levels, the potential to draw substantial buyer activity into the market is becoming limited at the end of the month.

Monday Closing Livestock Market Summary - Firm Pressure Redevelops Monday

GENERAL COMMENTS

Cash cattle trade activity remains undeveloped with limited interest shown at this point. This is not unexpected with overall bids and asking prices not likely to actively develop until midweek. Trade is likely to be pushed off to the second half of the week, as traders focus on the split between futures and beef values seen over the last few days. According to the closing report, the national hog base is $0.28 higher compared with the prior day settlement ($56-$63.50) weighted average $62.89. The corn futures are higher in light activity. March futures were 2 cents higher Monday. The Dow Jones Index is 399 points higher with the Nasdaq up 84 points.

LIVE CATTLE

Live cattle futures closed mixed after trading mostly lower in most contracts through the session ($0.40 higher to $0.85 lower). Firm pressure redeveloped in nearby contracts following concern that additional selling activity will develop in feeder cattle trade through the week, and the weaker tone of the market may limit any stability in live cattle futures. Late-day support moved into the deferred contracts, which continues to drive additional longer-term buying back to the table. But this may not be enough to hold prices higher over the near future. Beef cut-outs: higher, $1.90 higher (select, $214.72) and up $1.15 (choice, $219.52) with moderate demand and light offerings (45 loads of choice cuts, 17 loads of select cuts, 9 load of trimmings, 12 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL:

Steady. Limited activity is expected to be seen through the complex with bids and asking prices undeveloped at this point. There is likely to be very little support seen in the complex to point to firming market levels. Most trade is likely to develop late in the week, after month-end and the futures market may see some market shifts.

FEEDER CATTLE:

Light-to-moderate pressure quickly developed across the complex ($0.17 to $0.55 lower) with traders focusing on limited trade and concerned with further market pressure. Very little long-term direction developed in the complex as traders focused on the bearish news in Friday's Cattle on Feed report, which showed overall cattle placement significantly higher than estimates. This caused only limited market pressure as the weakness in the complex through last week carried the brunt of market pressure. CME cash feeder index for 2/22 is $147.63, down $0.42.

LEAN HOGS:

Pressure developed across all lean hog futures with the focus on strong market pullbacks in nearby trade ($0.25 lower to $1.42 lower). Strong follow-through losses moved into the market, adding to the pressure that developed late last week. What started out as light-to-moderate position-taking following the run higher last week has potentially turned into a market shift with uncertainty about long-term support. There could be some additional buyer activity moving into the market, but the choppy moves in both pork values and cash trade is limiting underlying support. Pork prices firmed early in the week with moderate support developing in the pork cutout. Primal prices were mixed in a wide range as all markets moved with triple-digit shifts either higher or lower through the day. Pork cut-out: $80.27 up $0.79. CME cash lean index for 2/22 -- $69.78, down $0.39. DTN Projected lean index for 2/23 -- $69.32, down $0.46.

TUESDAY'S CASH HOG CALL:

Steady to $1 lower. Very little market direction is expected to develop through the hog complex given the recent market moves. Packers are expected to post most bids steady to weak early Tuesday morning as the general trend of the cash market is not expected to change. Tuesday plant runs are expected to hit 465,000 head.