GENERAL COMMENTS:
Pressure developed in the lean hog trade Thursday. The October contract set the tone with a $2.20-per-cwt loss. The adjustment from previous unchecked gains is not unexpected and leaves market trends unchanged. Cattle futures moved in a narrow range in light trade. This could allow for sluggish but firm buying activity Friday. Cash cattle activity remains quiet with trade pushed off until Friday in all areas given the lack of increased bids developing during the day. Bids were seen in Nebraska at $109 to $111 live and $180 to $182 dressed. But no interest has been shown in the South at this point. This is a little surprising given that Southern interest typically develops earlier in the week. Asking prices remain firm at $113 and higher live and $186 to $187 dressed. The National Daily Direct afternoon hog report was $1.74 higher ($68-$87, weighted average $83) on 14,584 head sold. Corn futures moved lower in sluggish trade with the September contract down 5 cents per bushel. The Dow Jones Index was 128 points lower with the NASDAQ down 82 points.
LIVE CATTLE: Live cattle futures ended narrowly mixed ($0.25 lower to $0.05 higher) as traders questioned long-term support. Trade activity remained extremely limited Thursday as prices hovered on either side of unchanged most of the session. Late-day selling developed following lackluster cash market interest and questions about wholesale beef support caused prices to slightly erode. Given the general firmness in the market, the softness in prices is not expected to stimulate additional pressure, but could result in some wider price shifts over the next couple of weeks. Beef cut-outs: lower, down $0.24 (select, $189.18) to down $1.03 (choice, $212.57) with moderate demand and light-to-moderate offerings, 130 loads (82 loads of choice cuts, 29 loads of select cuts, 7 loads of trimmings, 12 loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL: Steady. The inability to spark trade early in the week is expected to cause both sides to adjust more than they would like. Initial interest is expected to remain sluggish Friday morning, although packer interest will likely improve quickly during the morning hours.
FEEDER CATTLE: Feeder cattle futures closed mixed ($0.25 lower to $0.35 higher) in light trade. Futures bounced higher and lower in a narrow-to-moderate range most of the session. The lack of direction in the live cattle trade and drop in corn futures helped rekindle limited buyer support late in the session. But the tone of the market remains firm, at best, as traders continue to struggle to push prices above highs set last week. The inability of futures to break above these resistance levels in the upcoming trading sessions may allow the feeder cattle market to return to a moderate sideways trading range that could be sustained through the end of the summer. CME cash feeder index for 7/24 is $137.42, up $0.71.
LEAN HOGS: Active liquidation developed in lean hogs as traders adjusted prices lower (down $0.30 to $2.20). October through February futures contracts posted triple-digit losses with traders offsetting a portion of recent gains. With the October contract rallying $11 per cwt over the past two weeks, traders quickly focused on position-taking opportunities Thursday. But even with the strong pressure Thursday, the tone and technical structure of the market remains strong, which may quickly rekindle buyer support Friday. Pork values surged higher following a $10-per-cwt rally in belly cuts. Pork cutout values added $2.45 per cwt, moving to $83.88 per cwt, on 283 loads. CME cash lean index for 7/23 is $75.58, up $1.29. DTN Projected lean index for 7/24 is $77.23, up $1.65.
FRIDAY'S CASH HOG CALL: Steady to $2 higher. Increased price support is expected Friday in order to sustain current packing schedules. Most bids are expected $1 higher Friday morning. Friday slaughter numbers are expected at 464,000 head. Saturday runs are expected at 9,000 head.
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