GENERAL COMMENTS:
Thursday shaped up to be a strong day for livestock contracts, as all three sectors closed mostly higher and the cash hog market closed significantly stronger too. Heading into Friday, the new rally will be tested as the market has teetered back and forth, not feeling 100% confident if higher is where prices should trend. Hog prices closed significantly higher on the National Direct Afternoon Hog Report, up $1.09 with a weighted average of $30.02 on 14,692 head -- WOW! December corn is up 2 3/4 cents per bushel and December soybean meal is up $3.60. The Dow Jones Industrial Average is down 361.19 points and NASDAQ is up 55.25 points.
LIVE CATTLE:
Live cattle contracts were feeling bold throughout the afternoon, but didn't close with as much steam as they packed earlier in the day. Still able to close fully higher, the live cattle contracts rallied anywhere from $0.10 to $0.77 stronger. With uncertainty still laced throughout the industry, deferred contracts were able to close higher than nearby contracts as most hope that by the end of 2020 or the beginning of 2021 this mess can be behind us. Cash cattle trade in the South has fared well this week, but seeing the sheer numbers that have traded, we knew that Nebraska and Iowa needed to move some cattle, and come Thursday afternoon Nebraska finally did. In Nebraska, cattle sold for $155 to $157 and live cattle sold for $96 to $97. Inquiry remains light in Iowa with no bids on the table. Packers may be short bought as a lot of the cattle bought this week have been for delivery next week 7/13/2020. Thursday's slaughter is estimated at 120,000 head, 1,000 head less than a week ago and 1,000 head more than year ago.
Thursday's Actual Slaughter Under Federal Inspection shared some discouraging news to cattlemen for the week ending 6/27/2020. Based on the USDA Estimated Weekly Slaughter, cattle slaughter was estimated to be upwards of 680,000 head for the week ending 6/27/2020 -- a level not seen since March of 2020. But Thursday's actual data confirmed that levels were not that exuberant, and unfortunately, carcass weights are up for both live weights and dressed weights. Actual slaughter totaled 664,812 head (which was still up 2.97% from the previous week), and actual live weights were up five pounds (1,369 pounds) and actual dressed weights were up four pounds (832 pounds).
Boxed beef prices closed lower: choice down $0.24 ($203.59) and select down $0.69 ($194.83) with a movement of 163 loads (75.85 loads of choice, 32.96 loads of select, 31.35 loads of trim and 23.23 loads of ground beef). Thursday's afternoon close hit low not seen since late in 2018 when the choice cuts teetered slightly above $200.
FRIDAY'S CASH CATTLE CALL: Steady. Pinpointing why this market is trading the way it is, is tough. Packers have an enormous amount of cattle available through the backlog, but are paying more for cattle this week than last week's averages. Seeing that quite a few loads have been bought with delivery for next week, or the following week, packers could be short bought and planning larger kills.
FEEDER CATTLE:
Feeder cattle contracts closed higher, but not as high as levels tested earlier in the day. August feeders closed $0.47 higher at $134.52, September feeders closed $0.50 higher at $136.17 and October feeders closed $0.35 higher at $137.12. The industry saw consistent gains with prices varying from $0.35 to $0.67 stronger. At Winter Livestock in Pratt, Kansas, compared to two weeks ago, steers weighing 750 to 900 pounds sold $2.00 to $4.00 higher and heifers weighing 700 to 800 pounds sold $3.00 to $4.00 higher. Breaker cows sold steady and lean cows sold $1.00 to $2.00 lower. The CME feeder cattle index 7/8/2020: up $3.54, $133.69.
LEAN HOGS:
The lean hog complex held nothing back trading into Thursday's closing hour. Nearby contracts rallied anywhere from $0.47 to $2.27 stronger while deferred contracts traded $0.62 to $0.87 lower. Cash prices rallied $1.09 stronger though the afternoon on a ginormous 14,692 head.
Pork cutouts totaled 347.07 loads with 317.40 loads of pork cuts and 29.67 loads of trim. Pork cutout values: down $0.04, $67.12. Thursday's slaughter is estimated at 469,000 head, 8,000 head more than a week ago and 9,000 head less than a year ago. The CME lean hog index 7/7/2020: down $0.55, $45.35.
Thursday's Actual Slaughter Under Federal Inspection shared positive news for pork productions -- a larger kill than the previous week and lower weights. For the week ending 6/26/2020, hog slaughter totaled 2,625,681 head (up 1.26% from the previous week) and live weights were down 34 pounds (253 pounds) and dressed weights were down 1 pound (213 pounds).
FRIDAY'S CASH HOG CALL: Steady. It's a tough call heading into Friday. Packers are obviously being aggressive in their cash buying so they can keep knives running at full steam, but it all really depends on what they have already bought and committed.
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