GENERAL COMMENTS:
As surprising as it may be, packers strengthened their bids and had to inch their prices up in order to buy cattle throughout Wednesday. The support came as a lofty surprise to the live cattle contracts, which pleasingly closed higher. The feeder cattle complex rolled strong throughout all of Wednesday, leaning heavily on the support from strong demand in the countryside. Lean hog contracts may not have been able to capture stronger closes throughout the market, but a higher pork cutout value boosted nearby contracts just enough to allow for some positivity. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.36 with a weighted average of $28.70 on 7,266 head. July corn is up 1 1/4 cents per bushel and July soybean meal is down $0.10. The Dow Jones Industrial Average is down 170.37 points and NASDAQ is up 14.66 points.
LIVE CATTLE:
The live cattle contracts started the day lower, mainly depressed from the weaker cash cattle market and looming supply. But as Wednesday progressed, packers swooped in after the FCE and bought cattle higher than what they had for earlier in the week, which ultimately bolstered futures into a stronger close. June live cattle closed $0.17 higher at $96.50, August live cattle closed $0.07 higher at $96.85 and October live cattle closed $0.07 higher at $99.82.
If you lay the pieces of the fat cattle market out on the table like you would a 1,000 piece, master-rated puzzle, the only logical fit for packers buying cattle higher at midweek is packers being short bought. We know that there is a plethora of cattle lining the bunks through the countryside, but knowing that a large portion of the cattle they've bought recently is all for immediate delivery, reinforces the notion that they're short bought.
Light trade developed in most areas Wednesday with Southern live deals marked at $100 to mostly $102, steady to $4.00 higher than the rest of this week's trade, but roughly $1.50 lower than last week's weighted average basis Texas, and about $3 lower than last week's weighted average basis Kansas. Northern dressed deals were marked at $157 to mostly
$162, steady to $5 higher than Monday and Tuesday's dressed market, but $7
lower than last week's weighted average basis Nebraska. Wednesday's slaughter is estimated at 120,000 head, up 4,000 head from a week ago and down 2,000 head from a year ago.
Boxed beef prices closed lower: choice down $9.96 ($217.93) and select down $5.09 ($208.08) with a movement of 200 loads (124.46 loads of choice cuts, 34.52 loads of select, 9.11 loads of trim and 32.00 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Packers may have inched prices higher Wednesday to get the cattle they needed, but with boxed beef prices on the downfall, they aren't going to like giving out more money than necessary.
FEEDER CATTLE:
Feeder cattle contracts continued to press on despite the live cattle contracts toying with some uncertainty midmorning. August feeders closed $0.70 higher at $133.57, September feeders closed $0.50 higher at $134.95 and October feeders closed $0.25 higher at $135.72. The market's strength solidified as cattle continued to sell well throughout the countryside. At Winter Livestock in Dodge City, Kansas, compared to last week, feeder steers over 800 pounds sold $2.00 to $3.00 higher. There was no recent price comparison on steers under 800 pounds, but higher undertones were noted. Feeder heifers weighing 750 to 800 pounds sold $5.00 to $6.00 higher. All other weights of heifers sold on a sharply higher market on limited numbers. Steer and heifer calves were not well tested. Slaughter cows sold $1.00 lower while slaughter bulls not well tested. The CME feeder cattle index for 6/16/2020: down $0.37, $128.41.
LEAN HOGS:
After the noon hour, the nearby lean hog contracts were able to inch the market higher through closing, though deferred contracts weren't as keen to the idea and closed mostly lower. Thankfully pork demand has been restored throughout grocery stores and consumers are pulling the meat from the freezers which elevated Wednesday's pork cutout value. July lean hogs closed steady at $49.65, August lean hogs closed $0.15 higher at $53.17 and October lean hogs closed $0.50 lower at $51.22.
Pork cutouts totaled 564.43 loads with 525.44 loads of pork cuts and 38.99 loads of trim. Pork cutout values: up $1.20, $65.47. Wednesday's slaughter is estimated at 460,000 head - 10,000 head more than a week ago and 19,000 head less than a year ago. The CME lean hog index 6/15/2020: down $0.28, $48.10.
THURSDAY'S CASH HOG CALL: Steady. It's encouraging to see consumers buying pork at the retail sector, but the fact remains that packers have all the supply they need. Cash prices will most likely stay in this steady to somewhat lower trend until the backlog is behind us.
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