GENERAL COMMENTS: Cash cattle trade remains undeveloped so far, with this week's business getting pushed back to Thursday or later. A few bids for Northern cattle were noted at $180 per cwt, but there is still daylight between that bid number and the asking prices, seen at $184 plus in the North or $114 in the South. According to the closing report, the national hog base was $0.64 higher ($56-$70, weighted average $67.60). Corn futures inched 2 1/2 cents higher. The stock market hit another fresh record high Wednesday (S&P 500 briefly above 3,000) and closed higher, up 13 points on the S&P 500.
LIVE CATTLE: Price-wise, live cattle futures had a relatively quiet day Wednesday, with the August contract losing only $0.50 and deferred contracts moving even less than that. However, there's been increasing volumes of trade activity throughout this week as traders judge outside markets and the chances for a trend change. Comments from Federal Reserve Chairman Powell on Wednesday carried mixed implications for exportable commodity markets like beef. He highlighted ongoing global trade tensions (gloomy), but the dollar moved lower and the stock market hit a new record high because that gloominess itself could mean that interest rate cuts will be forthcoming (cheerful). Beef cut-outs: lower, off $0.31 (choice, $214.42) to $1.20 (select, $190.89) with light-to-moderate demand and moderate-to-heavy offerings (182 total loads of cuts, trimmings, and grinds). Beef trimmings were sharply lower on light demand and moderate offerings.
THURSDAY'S CASH CATTLE CALL: Steady to $1 higher. The gesturing between dressed bids at $180 and the asking prices at $184, not to mention the favorable packer margins in the present environment, suggest that this week's business could take place at prices a bit higher than last week's.
FEEDER CATTLE: On Wednesday the August feeder cattle contract took back some of Tuesday's strong gains, staying under $143.10 throughout the trading session. This market is sometimes sensitive to volatility in the feed grains market, and traders will be prepared for a monthly crop supply and demand report to unleash volatility in corn prices Thursday. Note also that corn basis bids have strengthened 20 cents over the past month and continued to churn stronger Wednesday (Midwestern ethanol plants now bidding a few cents over the nearby corn futures contract). CME cash feeder index for 7/9: $135.76, up $0.32.
LEAN HOGS: At its peak Wednesday, the August lean hog futures contract was $6.775 per cwt higher than its Monday close, to emphasize the quickness and scale of this two-day rally. At the close of the session, that August contract sat at $81.725, an almost $10 per cwt premium over the nearby July contract, which is extreme even for this time of year. For that bullishness to continue, there will need to be a confident seasonal expectation of stronger belly prices, although the evidence from Wednesday's cut-out values wasn't promising. Belly prices dropped an unusually volatile $9.32 to $95.19 per cwt. Overall pork cut-out: $71.60, down $2.17. CME cash lean index for 07/08: $71.25, down $0.67 (DTN Projected lean index for 07/09: $70.77, down $0.48).
THURSDAY'S CASH HOG CALL: Steady to $1 lower. Strong futures may help to stabilize the cash market over the next few days, but eroding carcass values could work against that influence. Estimated daily slaughter (478,000) and week-to-date slaughter (1,435,000) are running at a pace that reflects the record-large supplies available.
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