GENERAL COMMENTS
Cash cattle trade has started to develop Wednesday afternoon, with light trade seen in the South at $117 per cwt. This is $3 per cwt lower than last week. Trade is also seen in the North with live trade seen at $117 per cwt and dressed trade at $188 per cwt. Both prices are generally $2 per cwt lower than last week's price levels. Bids are also seen at $117 on a live basis and $186 to $187 dressed in other areas where sales have not yet been reported. Asking prices remain at $120 in the South and $192 through the North. Activity on the Fed Cattle Exchange Auction report Wednesday listed a total of 2,119 head, with 772 actually sold, 944 head listed as unsold and 403 listed as PO. The weighted average was $117.68. The state-by-state breakdown looks like this: KS 378 total head, with 130 head sold at $117.50, 105 head unsold, 143 head listed as PO ($117.75); NE 962 total head, with 369 head sold at $117.50-$117.75, 593 head unsold, and 0 listed as PO; TX 554 total head, with 235 head sold at $117.75, 112 head unsold, and 207 head listed as PO ($117.75); CO 134 total head, with 0 head sold, 134 head unsold; IA no test; other states (OK,SD,) 91 total head, with 38 head sold (SD) at $118.25, 0 head unsold, and 53 head (OK) listed as PO ($117.00). The delivery date/weighted average breakdown is as listed: 1-9 day delivery: 1,372 head total, 403 head sold with a weighted average price of $117.72; 1-17 day delivery 600 head total, 369 head sold with a weighted average price of $117.63; 10-17 day delivery 147 head total, with no sales; 17-30 day delivery, none. According to the closing report, the national hog base is $0.32 lower compared with the Prior Day settlement ($77.00-$83.00) weighted average $81.75. The corn futures moved higher in light activity. September futures were 4 cents higher Wednesday. The Dow Jones Index is 82 points higher with the Nasdaq up 7 points.
LIVE CATTLE
Late day buying flooded the market near the closing bell, offsetting pressure that had held through most of the trading session ($0.12 to $1.12 Higher). Trade volume during the first hour and last hour of trade Wednesday remained extremely light, allowing buyers to quickly step into the complex with very little resistance, and moving prices quickly and effortlessly higher. August futures posted a $1.12 per cwt rally in the closing minutes of trade, settling at $114.30 per cwt. It is uncertain just how much support will redevelop at these price levels early Thursday based on the end of the day price moves seen Wednesday, and cash cattle movement development seen already in the week. Beef cut-outs: lower, $1.06 lower (select, $197.87) to down $0.55 (choice, $207.07) with light to moderate demand and offerings (75 loads of choice cuts, 32 loads of select cuts, 1 load of trimmings, 36 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL:
Steady to $2 lower. The development of light to moderate trade in parts of the North at $2 lower than last week, has started out market activity Wednesday afternoon. This could help to draw additional support, although it is uncertain if feedlot managers will settle for this level given the last day bounce in futures prices seen at the end of the session. No sales have developed in the South, but bids have been seen at $117 through much of the day.
FEEDER CATTLE
Moderate to wide trading ranges seen early Wednesday quickly shifted into a narrowly mixed price range following strong late day buying in live cattle futures ($0.15 lower to $0.40 higher). Strong pressure was seen in nearby feeder cattle futures at midday, focusing on an underlying lack of support through the entire cattle market and sluggish trade, quickly regained market composure at closing bell. This allowed prices to close within a narrow trading range, as August and September futures posted single-digit losses, while the rest of the complex posted moderate gains. Firm gains in front month live cattle futures is helping to draw additional buyer support back into the complex midweek. CME cash feeder index: 7/25: $151.57, unchanged.
LEAN HOGS
Firm gains developed during the session midweek, helping to spark additional underlying commercial interest through the complex ($0.12 to $0.80 higher). Follow through buyer support stepped back into the complex early Wednesday morning, moving front month futures to triple-digit gains as traders continued to look for underlying support from outside markets. But the inability to draw support from additional traders limited gains through the session, although gains were able to hold. August futures closed 55 cents per cwt higher at $82 per cwt as prices continue to march higher after moving nearly $2 per cwt, above short-term support levels over the last couple of trading sessions. Increased focus will continue to be placed on cash market movement through the end of the month, as well as shifts in pork values. Carcass values tumbled sharply lower, as all primals posted moderate to sharp losses except belly markets Wednesday. Pork cut-out: $100.58 up $1.82. CME cash lean index for 7/24: $90.44, down $0.69. DTN Projected lean index for 7/25 $89.84, down $0.60.
THURSDAY'S CASH HOG CALL:
Steady to 50 cents lower. Continued light pressure is expected to slowly develop through the week with packers focusing on the ability to limit spending through the end of the week. Even though initial bids are called steady to 50 cents per cwt lower, most bids are expected to remain steady early Thursday morning. The recent support in futures trade and continued stability in cutout values is helping to bring overall fundamental stability to the cash market. Thursday's slaughter expectations are set at 440,000 head with 63,000 likely to be seen Saturday.
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