Tuesday Closing Livestock Market Summary - Live Cattle Futures Rally

GENERAL COMMENTS: Early pressure developed in lean hog and feeder cattle trade Tuesday morning. Lean hog futures closed lower for the day, but nearby contracts still remain over $1 per cwt higher for the week. Live cattle futures continued to shift higher with firm gains developing in all nearby trade. Cash cattle markets remained sluggish Tuesday afternoon with a few token bids seen in the North at $196 dressed basis. Asking prices are still undeveloped as feedlot managers try to assess market direction before pricing cattle. Given the volatility in the market, feeders are unwilling to be too quick to put prices on inventory for the fear of leaving too much money on the table if markets continue to firm. It is likely that most business will be pushed off until late in the week. National Daily Direct afternoon hog report was $0.39 lower ($46 to $51.08, weighted average $50.16) on 8,008 head sold. Corn futures were higher in light activity with the March futures contract up 1 1/4 cents. The Dow Jones Index was 171 points higher with the Nasdaq up 53 points.

LIVE CATTLE: Live cattle futures were $0.12 to $0.97 higher. In contrast to the feeder cattle and lean hog trade, the live cattle market firmed through the day. Much of the support was because prices held moderate but realistic moves Monday, leaving traders no need to correct price levels Tuesday. The stability that is redeveloping in live cattle futures is built on firm fundamental support, and futures could make another run at contract highs before the end of the week. Beef cut-outs: lower, down $0.31 (select, $213.10) to down $0.63 (choice, $217.02) with light demand and moderate offerings on 127 loads (75 loads of choice cuts, 18 loads of select cuts, 11 load of trimmings, 23 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL: Steady. Limited interest is expected to be seen early Wednesday with asking prices still illusive and most packers unwilling to offer market bids at this point. More activity is expected through the day Wednesday, although trade may be seen later in the week.

FEEDER CATTLE: Feeder cattle futures close mixed, $0.40 lower to $0.20 higher. Light-to-moderate pressure developed Tuesday as traders backed away from strong Monday gains. The tone of the market continues to firm as the majority of early week support is still intact following position-squaring. The potential for increased buyer support through the end of the week could help bring additional stability to the complex. Feeder cattle sales on the Oklahoma City auction recorded a total of 12,200 head sold. This is nearly 2,000 head more than last week. Prices were generally steady to $2 higher on feeder steers, while feeder heifers under 650 pounds were generally $1 to $3 lower. Heifers 650 to 700 pounds averaged $2 per cwt higher than last week. CME cash feeder index for 2/4 is $141.54, up $0.53.

LEAN HOGS: Traders backed away from overly aggressive Monday gains on, pushing futures $0.15 to $1.45 lower Tuesday. The wide swings in the lean hogs market seen early this week could continue over the next several days. On Tuesday, all contracts backed away from initial losses. April through July futures posted $1-per-cwt losses and light pressure developed in deferred contracts. Underlying support still remains, as nearby contracts are still over $1 per cwt higher than where they started the week, leading to what could turn into an impressive market rally. Active pressure moved into pork cutouts Tuesday with all but rib cuts moving lower. Pork cutout values fell $1.90 per cwt, moving to $66.22 per cwt on 415 loads. CME cash lean index for 2/1 is $57.41, up 23. DTN Projected lean index for 2/4 $57.36, down $0.05.

WEDNESDAY'S CASH HOG CALL: Steady to $1 lower. Little change is expected early Wednesday in cash trade with bids expected steady to $1 per cwt lower. Most bids are expected steady to weak with stability expected to build through the entire complex. Wednesday slaughter is expected to hit to 477,000 head. Saturday runs are pegged at 240,000 head.

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Tuesday Midday Livestock Market Summary - Mixed Trade Develops As Traders Adjust Positions

General Comments

Moderate follow-through buying has quickly developed in live cattle trade Tuesday morning. Even though feeder cattle and lean hog futures have posted losses through the morning, the underlying firm tone carried from Monday's rally is still holding. Corn markets are higher in light trade. March corn futures are 1 1/4 cent higher. Stock markets are higher in light trade. Dow Jones is 75 points higher with Nasdaq up 17 points.

LIVE CATTLE:

Firm gains are holding in nearby live cattle trade as traders continue to adjust markets higher following early-week support. The strong underlying support in all livestock trade is helping to solidify buyer activity through the entire complex. This may add even more momentum to the complex as traders are looking for increased support in meat values as well as firming outside market shifts through early February. Cash cattle activity remains undeveloped Tuesday with bids and asking prices unavailable. It is expected that most trade will be pushed to the last half of the week. Feedlot managers are slow to float asking prices as the supportive moves in futures trade is likely to firm market prices as the week continues. Boxed Beef cut-outs at midday are mixed, $0.28 higher (select) and down $0.26 per cwt (choice) with light movement of 66 total loads reported (35 loads of choice cuts, 13 loads of select cuts, 3 loads of trimmings, 14 loads of ground beef).

FEEDER CATTLE:

Prices in all feeder cattle trade have eroded through the morning, but limited pressure is focused more on early market adjustments following the sharp Monday gains. Nearby futures are holding 50 to 70 cent losses, which is still over $1 per cwt higher than markets opened Monday. Traders are now focusing on rebuilding fundamental and technical support through the complex.

LEAN HOGS:

Limited selling is seen midday following sharp losses moving into the complex through the first hour of trade. Most of this morning pressure is focused on positioning squaring after the strong gains developed Monday. April futures are leading the complex lower with a $1.45 per cwt loss, although the tone of the market remains firm thanks to gains of nearly $3 per cwt seen Monday. Following the position squaring seen early in the morning, it appears that commercial buying is starting to redevelop, as traders focus on rebuilding market support based on expected longer term momentum. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.12 at $50.43 per cwt, with the range from $46.00 to $51.08 on 6,603 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up $0.35 at $50.05 per cwt, with the range from $46.00 to $50.25 on 3,640 head reported sold. Pork carcass values are lower on the morning report with prices slipping $1.14 per cwt at $66.98 per cwt with 216 loads traded. Lean hog index for 2/1 is $57.41, up $0.23, with a projected two-day index is $57.36, down $0.05.

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Tuesday Morning Livestock Market Summary - Continued Support Expected

GENERAL COMMENTS:

Buyer support is expected to redevelop in initial trade Tuesday morning as traders respond to the rally off recent market lows in feeder-cattle trade and try to push prices higher through early February. Even though the focus is on expanding prices higher in both live cattle and feeder cattle futures, the potential for position-taking after the sharp Monday rally is increasing. This could allow for widespread market volatility through morning trade, although the firming tone of the market is expected to continue through most of the week. Cash cattle activity is expected to remain sluggish as bids and asking prices remain undeveloped and likely will remain that way until Wednesday or later. Increased cattle on showlists could give an opportunity for packers to get caught up on buying needs, although feeders are expected to be aggressively pricing cattle through the week.

Follow-through buyer interest is expected when markets open as sharp triple-digit gains on Monday sparked by renewed technical support, at least temporarily. April futures led the complex to near limit gains after traders moved away from early-session lows of $59.65 per cwt. This was the lowest price point since last summer, as long-term support levels held. Due to the nearly unchecked pressure the last two months, there continues to be wide-open trading space before active buying interest may hit resistance. The biggest challenge facing the lean hog complex is the still-weak market fundamentals. This could bring about increased volatility in the near future. Cash hog trade is expected steady to $1 per cwt lower, although most bids are expected steady Tuesday. Slaughter runs are expected at 477,000 head Tuesday.

BULL SIDE	BEAR SIDE
1) Sharp gains developed in choice beef cutouts Monday. This support in beef values is expected to add even more underlying strength to the entire cattle futures complex through the week.	1) Firm discounts continue to be seen in late summer and fall contract months. This could limit the longevity of futures support as traders are focusing on short-term demand needs.
2)Firm cash market gains last week are expected to create higher asking prices from feedlot managers. The underlying support in futures trade will likely cause many of these managers to firmly hold onto price levels through the week.	2)The sharp triple-digit rally in feeder cattle trade is expected to bring about even more volatility. This has the potential to add sharp losses through the feeder cattle complex. Depending more and more on movements and activity levels in the grain complex.
3)Sharp futures gains took the market by storm Monday as prices surged higher as traders hold long-term support levels set last summer. This may uncover additional buyer strength that had been waiting months for a market bottom.	3) Cash hog values still remain extremely weak, as packers still have adequate market ready hogs available at their disposal without aggressively shifting prices higher. Lack of consistency in Monday's market rally puts even more concern on long-term price levels.
4) Strength in pork values created a sense of stability Monday when combined with strong futures trade. Even with supply concerns, the strong triple-digit move higher in pork cutouts spoke volumes.	4) Late 2019 and early 2020 contracts struggled to post moderate gains of 20 cents to 50 cents per cwt. This continues to instill concerns of long-term supply building across the entire pork industry.

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Monday Closing Livestock Market Summary - Livestock Futures Rally

GENERAL COMMENTS: Sharp gains quickly redeveloped in all livestock trade Monday on technical shifts. Lean hog and feeder cattle futures posted sharp triple-digit gains with April lean hog futures leading the complex higher. The concern is how much follow-through support will redevelop over the next couple of days due to limited fundamental changes in either hog or cattle markets. Cash activity was undeveloped Monday with bids and asking prices nonexistent and likely to not be seen until midweek or later. Showlists appear to be generally larger, with gains seen in Kansas, Nebraska and Texas, while Colorado appears to be smaller. Active trade is expected to be pushed off until the second half of the week with Friday trade possible again. The National Daily Direct afternoon hog report was $0.21 higher ($46-$51.28, weighted average $50.59) on 5,972 head sold. Corn futures were higher in light activity with the March futures contract closing 1 cent higher. The Dow Jones Index was 175 points higher with the Nasdaq up 83 points.

LIVE CATTLE: Live cattle futures saw firm gains following a rally in feeder cattle. Futures closed $0.27 to $0.85 higher. Firm buyer support developed Monday as buyers focused on strong activity in feeder cattle and lean hog futures. Prices have now moved off last week's lows, as the April contract bounced 72 cents higher. However, the market remains range bound at this point. After a strong market correction last week pulled prices down from contract highs, traders were intent on boosting support based on longer-term fundamental strength in the market. The April contract closed at $127 per cwt, still over $1 per cwt under January highs. Increased volatility could be seen throughout livestock markets the next couple of days. Beef cut-outs: higher, up $0.26 (select, $213.41) to up $3.39 (choice, $217.65) with good demand and light-to-moderate offerings on a total of 81 loads (39 loads of choice cuts, 24 loads of select cuts, 9 load of trimmings, 9 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL: Steady. Little development is expected in cash trade the first half of the week with bids and asking prices seemingly being pushed off as packers and feeders look for some stability after early futures support.

FEEDER CATTLE: Buyers aggressively stepped back into the feeder cattle market Monday, pushing nearby contracts off two-week lows. Futures closed $1.12 to $1.82 higher. The renewed interest in feeder cattle may have been sparked by limited support in the grain trade following the announcement that China would step back into the market and make additional soybean purchases. The underlying support in live cattle trade and recent cash market support has helped to solidify buying and push prices off short-term support levels. Prices backed away from session highs, but the April contract closed at $145.82, identical to its recent high seen last Thursday. Continued buyer support early Tuesday is expected to bring technical support through the entire cattle complex. CME cash feeder index for 2/1 is $141.01, down $0.85.

LEAN HOGS: Lean hog futures closed $0.22 to $2.92 higher. The April futures contract led the market higher with contracts nearly hitting limit gains at closing bell. The April contract settled $2.92 per cwt higher following strong support in the cattle trade as well as commercial buyers moving back into the market on hopes of increased trade and additional product movement. After unchecked market liquidation pushed April lean hog futures over $6 per cwt lower, it took just a tap to bring buyers flooding back into the market. Traders had been searching for a market bottom through most of January. Firm buying moved back into pork cutouts with all primal cuts except butts holding moderate-to-strong support Monday. Pork cutout values gained $1.13 per cwt, moving to $68.12 per cwt on 257 loads. CME cash lean index for 1/31 is $57.18, down 22. DTN Projected lean index for 2/1 $57.41, up $0.23.

TUESDAY'S CASH HOG CALL: Steady to $1 lower. Firm pressure is expected to develop in cash markets even though the tone of the market may be changing. Early week support in futures trade may bring back traders who have been searching for the bottom of the market. Tuesday slaughter is expected to hit to 477,000 head.

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