Cash cattle markets are generally quiet with very limited movement through the day Tuesday. There have been a few token bids develop late Tuesday afternoon in the North with bids at $168 to $170 per hundredweight (cwt). At this point, there is no interest shown in the South, and asking prices are quiet in all areas. Packers are expected to become more active through the day Wednesday, but actual sales may still be delayed until late in the week. According to the closing report, the national hog base is $2.64 higher compared with the Prior Day settlement ($40-$48.50, weighted average $45.73). Corn futures are lower in light activity. September futures were 1/4 cent Lower Tuesday. Dow Jones Index is 139 points higher with Nasdaq up 45 points.
There was a lack of market activity in live cattle trade with the front-month October contract showing the most late-day pressure. Futures closed steady to $0.85 lower. Despite the limited trade and early buyer support attempting to move into the market, front-month October futures led the complex lower with an 85-cent-per-cwt loss, closing at $109.30 per cwt. Nearby contracts are still slightly above short-term lows of $108.90 per cwt set last week, but this could add some uncertainty to the entire market through the rest of the week. Beef cut-outs: mixed, $0.62 higher (select, $198.31) to down $0.23 (choice, $206.07) with moderate demand and offerings (71 loads of choice cuts, 26 loads of select cuts, 17 load of trimmings, 17 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL:
Steady to $1 higher. Following the initial bids seen Tuesday, bids are expected to still remain sluggish, but will likely be restated near $168 dressed basis. Expect increased activity in bids and asking prices over the next couple of days.
Feeder cattle futures struggled to find additional support, closing $0.45 lower to $0.17 higher. Firm pressure in other commodity markets, as well as building softness that has trickled into live cattle trade Tuesday, eroded overall support in nearby feeder cattle futures. The most aggressive pressure developed in the remaining 2018 contract months with traders focusing on potential follow-through softness in grain markets and expectations that beef demand may not significantly change in the next couple of months. Traders are also becoming more cautious about the overall direction of the market as prices continue to be stuck in the sideways trading range seen through most of the summer. CME cash feeder index for 9/10 is $152.09, down $0.53.
Sluggish activity in lean hogs allowed for increased selling activity to develop late in the session with futures closing $1.60 lower to $0.05 higher. Nearby October and December lean hog futures posted firm triple-digit losses following the inability for early buyer interest to stay active. This pushed most other contracts to narrow losses, as the focus in the lean hog market was centered on price shifts in 2018 contract months. Expectations of supply changes in 2019 have already been factored into the market, allowing deferred contracts to hold an aggressive premium over front-month October trade. Pork values continue to show moderate-to-firm support with triple-digit gains seen in most primal markets. Pork cutout values gained $1.39 per cwt, moving to $69.24 per cwt. CME cash lean index for 9/7: $47.00, up $0.99. DTN Projected lean index for 9/8: $47.55, up $0.55.
WEDNESDAY'S CASH HOG CALL:
$1 to $3 higher. Firm follow-through support is expected to develop midweek in cash hog values. Although the focus on increased cash bids well be seen at most packers, most bids will likely be $1 to $2 per cwt higher. Wednesday runs are likely to hit 468,000 head. Saturday slaughter numbers are likely to hit 153,000 head.
Rick Kment can be reached at email@example.com
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