GENERAL COMMENTS:
Lean hog futures became the clear winner for the day as traders pushed nearby contracts triple-digit higher. Cattle trade remains under pressure as early buyer interest quickly evaporated. Hog prices were higher on the National Direct Afternoon Hog Report, up $1.94 with a weighted average of $33.60 on 12,852 head. December corn is down 5 cents per bushel and December soybean meal is down $2.80. The Dow Jones Industrial Average is up 159.53 points and NASDAQ is down 86.73 points.
LIVE CATTLE:
Firm pressure developed in live cattle futures with traders focusing on the inability to sustain early gains. The lack of volume and new buyer support moving into the market could continue to put pressure on prices through the week. Traders are also starting to adjust to the upcoming cattle on feed report. With early estimates pointing to a generally neutral report, the last few months have shown that actual numbers can still surprise the market. August live cattle closed $0.45 lower at $101.85, October live cattle closed $0.25 lower at $106.12 and December live cattle closed $0.25 lower at $110.45. Cash cattle trade was mostly quiet throughout Monday, even though packers started inquiring on cattle early Monday morning. There was just a handful of cattle that traded in Nebraska for $157 dressed, steady with last week's trade. Asking prices are still hard to come by for dressed cattle, but the industry seems to be leaning towards pricing live cattle at $100 or better this week. Tuesday's slaughter is estimated at 118,000 head, down 1,000 head from a week ago and down 3,000 head from a year ago.
Light cash cattle trade started to develop in the South at $96 per cwt. This is generally $1 per cwt higher than last week's average, but there still is expected to be some additional activity seen through the week in most areas.
Boxed beef prices closed lower: choice down $0.86 (200.88) and select down $0.29 ($191.30) with a movement of 159 loads (90 loads of choice, 22 loads of select, 11 loads of trim and 36 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. Limited early week movement of cattle seems to put more emphasis on trade later in the week. It is uncertain if both sides will wait for Friday's cattle on feed report or allow cash trade to trickle in through the next couple of days.
FEEDER CATTLE:
The inability to hold midday gains through the end of the session Tuesday was another blow to the feeder cattle complex. The lack of support in the complex focused on the pressure developing in live cattle trade and concern that upward market momentum may continue to be limited in the upcoming days and weeks. Although the focus on the large round of feeder cattle sales could help bring some stability to futures trade, there remains uneasiness about short- and long-term supplies ahead of the cattle on feed report. The CME feeder cattle index 7/20/2020: up $0.17, $136.48.
LEAN HOGS:
Strong underlying support developed through lean hog futures based on renewed support in pork cuts and the expectation that further commercial support is may continue to move into the livestock market due to pressure in several other outside markets. August lean hogs close $1.07 higher at $51.47, October lean hogs closed $0.82 higher at $50.02 and December lean hogs closed $0.35 lower at $51.55. Pork cutouts totaled 377.57 loads with 330.83 loads of pork cuts and 46.73 loads of trim. Pork cutout values: up 3.79, $72.23. Tuesday's slaughter is estimated at 478,000 head, up 3,000 head from a week ago and up 2,000 head from a year ago. The CME lean hog index 7/20/2020: up $0.74, $48.64.
WEDNESDAY'S CASH HOG CALL: Steady. Limited movement is expected in cash hog prices midweek as packers continue to aggressively source hogs due to currently strong margins. But the fact that market-ready hogs remain available will limit upside prices paid for hogs over the near term.
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