GENERAL COMMENTS:
Wednesday's trade can be summarized as a pullback day for traders. After pushing the contracts higher Tuesday, traders panicked come Wednesday and looked to the market's fundamentals for direction. Hog prices closed lower on the National Direct Afternoon Hog Report, down $5.26 with a weighted average of $122.78 on 5,520 head. July corn is up 4 1/2 cents per bushel and July soybean meal is down $9.10. The Dow Jones Industrial Average is down 71.34 points and NASDAQ is up 18.46 points.
LIVE CATTLE:
There was hardly any action seen in Wednesday's live cattle market. Live cattle contracts fell lower and the cash cattle market went largely untested. June live cattle closed $0.60 lower at $122.50, August live cattle closed $0.30 lower at $122.87 and October live cattle closed $0.20 lower at $128.17. There was a light trade of cattle in the Northern Plains that sold for $197 ($1.00 higher than a week ago) and in the South there was just a sparse sampling of live cattle that sold for $122. Looking to Thursday, there should be more cash cattle interest as the market yet to really seen any substantial trade. Wednesday's slaughter is estimated at 117,000 head, 3,000 head less than a week ago and 1,000 head less than a year ago.
The Fed Cattle Exchange Auction listed a total of 5,844 head, of which 64 actually sold, 226 were scratched from the auction, 5,554 head were listed as unsold, as they did not meet the reserve prices that ranged from $118 to $124. Opening prices ranged from $118 to $120, one lot at $90; high bids ranged from $120 to $122. The state-by-state breakdown looks like this: Texas 4,449 total head, all of which went unsold; Kansas 341 total head, with 64 head sold at $122, 170 head went unsold and 107 head were scratched from the auction; Oklahoma 1,054 total head, none of which sold; 935 went head unsold and 119 head were scratched from the auction.
Boxed beef prices closed lower: choice down $3.70 ($312.05) and select down $4.34 ($275.41) with a movement of 119 loads (60.79 loads of choice, 36.43 loads of select, 12.03 loads of trim and 9.24 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady to $1.00 higher. Packers aren't wanting to support the cash cattle market, but they might have to in order to get the cattle they need. It will be interesting to see what the week's total movement amounts to. We know that packers are sitting on committed supplies, so their need to support the cash cattle market isn't vast, but they still need to buy some.
FEEDER CATTLE:
The feeder cattle contracts closed fully lower even though most of the nearby corn contracts closed slightly lower too. Following the market's strong rally over the last 10 days, traders were quiet in Wednesday's trade as they wanted to gauge where the market's fundamental support stood. If the cash cattle market can prove to be stronger this week, feeders stand a chance at trading higher yet again, especially if the corn market trades steady to even lower. Looking to Thursday, the market will have its eyes and ears on the Northern Livestock Video Auction's Early Summer Special sale as last week's debuting through Superior was strong, but still, producers look for more answers as to what this year's fall feeder cattle market could be. The CME Feeder Cattle Index for June 22: up $0.20, $145.44.
LEAN HOGS:
The lean hog market endured a lower waning day as the market was still rocked by Tuesday's sharply lower pork cutout close. July lean hogs closed $3.00 lower at $104.52, August lean hogs closed $2.97 lower at $100.72 and October lean hogs closed $1.55 lower at $83.85. Looking to Thursday, the lean hog market's regression partly comes in preparation ahead of the week's export report. With China's hog market weakening, it's likely that Thursday's export report will be bearish as their need to buy foreign product dissipates. Pork cutouts totaled 366.64 loads with 316.44 loads of pork cuts and 50.20 loads of trim. Pork cutout values: down $0.01, $107.82. Wednesday's slaughter is estimated at 476,000 head, 1,000 head less than a week ago and 5,000 head more than a year ago. The CME Lean Hog Index for June 21: up $0.05, $120.73.
THURSDAY'S CASH HOG CALL: Lower. With demand lessening in the retail sector, packers' aggression in the cash market toward the later half of the week could be less.
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