GENERAL COMMENTS:
Lean hog contracts fought some nearby pressure, but other than that, the livestock complex was able to close mostly higher for the day. It was encouraging to see both markets move a considerable amount of meat as the industry needs consumers to help work through this backlog. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.05 with a weighted average of $30.76 on 6,942 head. July corn is down 6 1/4 cents per bushel and July soybean meal is down $1.30. The Dow Jones Industrial Average is down 300.14 points and NASDAQ is up 29.01 points.
LIVE CATTLE:
Live cattle contracts caught a burst of energy midmorning Tuesday and traded higher all the way through closing. June live cattle closed $2.20 higher at $96.32, August live cattle closed $.47 higher at $97.80 and October live cattle closed $1.20 higher at $100.57. With such a large basis between cash and futures, it's comforting that the nearby live cattle contracts closed higher for the simple fact that it adds bullish energy into the market. Secondly, if the board is able to inch higher and higher, the cash market won't have to drop the entire distance. The market is waiting, simply passing time until cash cattle trade develops, which is anticipated to be lower and on a slimmer volume this week. With the backlog of cattle, weakening boxed beef prices and heavier weights, the cash market is bound to give way merely any day now. Some light trade developed in parts of Nebraska and Iowa Tuesday afternoon, but certainly not enough to establish any sort of market trend for the week. In Iowa, dressed cattle sold for $165 to $168 and in Nebraska dressed cattle sold for $165 to $166. Tuesday's slaughter is estimated at 117,000 head, up 1,000 head from a week ago and 5,000 head less than a year ago.
Boxed beef prices closed lower: choice down $7.58 ($247.00) and select down $3.17 ($227.95) with a movement of 230 loads (127.85 loads of choice, 40.64 loads of select, 15.54 loads of trim and 45.82 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Lower. With packers being quiet thus far this week, one is led to believe that the last two weeks of extreme aggression in the cash market will allow them to be less involved this week. With there only being a few cattle consigned to this week's FCE, trade will most likely develop sometime after the auction.
FEEDER CATTLE:
Feeder cattle contracts wasted no time rallying once the market indicated that there was a chance to do so. As soon as the live cattle contracts started to turn positive and trade higher, the feeder cattle contracts jumped on board and did the same. August feeder cattle closed $1.17 higher at $134.25, September feeders closed $1.02 higher at $135.55 and October feeders closed $1.00 higher at $136.02. At Blue Grass Stockyards, in Lexington, Kentucky, compared to last week, feeder steers were steady to $2.00 higher with good demand while yearling steers sold $2.00 lower with only a moderate demand. Feeder heifers under 600 pounds sold $2.00 to $4.00 higher with very good demand for weaned heifers weighing 500 to 600 pounds, and yearling heifers sold steady to $1.00 lower. Slaughter cows sold $2.00 higher and slaughter bulls sold $3.00 to $5.00 higher. The CME feeder cattle index 6/8/2020: up $0.45, $129.52.
LEAN HOGS:
Lean hog contracts fought some nearby pressure, but the deferred contacts were able to close higher. As the June contract is set to expire later this week, traders are moving their positions to July and August. June lean hogs closed $0.50 lower at $48.07, July lean hogs closed $1.00 at $52.97 and August lean hogs closed $1.00 lower at $56.80. It's exciting to see pork cutouts exceeding 500 loads as the country needs consumers to actively demand meat to help move product off the shelf and keep cycling through the backlog of supply. Pork cutouts total 524.58 loads with 493.77 loads of pork cuts and 30.81 loads of trim. Pork cutout values: down $1.62, $69.26. Tuesday's slaughter is estimated at 450,000 head, 33,000 head more than a week ago and 22,000 head less than a year ago. The CME lean hog index 6/5/2020: down $1.42, $51.93.
WEDNESDAY'S CASH HOG CALL: Lower. The backlog of hogs is going to continue to pressure the cash market until fully resolved.
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