GENERAL COMMENTS:
The feeder cattle complex didn't fare well Wednesday, as cow-calf producers and feedlot managers alike were all hoping that more corn acres were going to surface in Wednesday's report. Nevertheless, the feeder cattle contracts closed fully lower with both the live cattle and lean hog contracts closing mostly higher. Hog prices closed higher on the National Direct Afternoon Hog Report, up $2.39 with a weighted average of $113.02 on 8,562 head. December corn is up 40 cents per bushel and December soybean meal is up $27.90. The Dow Jones Industrial Average is up 210.22 points and NASDAQ is down 24.39 points.
LIVE CATTLE:
With the June live cattle contract now expired, the spot month of August takes the live cattle market's full attention, with October trailing closely behind. The spread between August and October shows the latter part of the year treating the market better than the nearby, as market supplies of readily-able fed cattle could be tighter especially if consumer demand continues to beckon for more beef. August live cattle closed $0.80 higher at $122.72, October live cattle closed $0.40 higher at $128.15 and December live cattle closed $0.32 higher at $132.10. Southern live cattle deals were marked at $120 to $122, which is steady to $2.00 lower than last week's movement. Northern dressed cattle sold for $198 which was about $1.00 higher than last week. Supplies in the North are more current than those in the South. Much of the trade that developed in Nebraska was for delivery for the week of July 12th. Wednesday's slaughter is estimated at 120,000 head, 3,000 head more than a week ago and 2,00 head more than a year ago.
The Fed Cattle Exchange Auction listed a total of 5,362 head, of which 608 actually sold, 407 head were scratched from the auction, and 4,347 head were listed as unsold, as they did not meet the reserve prices that ranged from $95 to $126. Opening prices ranged from $90 to $121, high bids ranged from $119 to $124. The state-by-state breakdown looks like this: Texas 4,391 total head, with 447 head sold at $212.50-$122, 3,572 head went unsold, 372 head were scratched of those 149 head were scratched due to being sold via private treaty at $122; Oklahoma 753 total head, with 51 head sold at $120, 702 head went unsold; Kansas 218 total head, with 110 head sold at $124, 73 head went unsold and 35 head were scratched.
Boxed beef prices closed lower: choice down $1.05 ($291.29) and select down $1.13 ($269.27) with a movement of 131 loads (87.21 loads of choice, 22.83 loads of select, 9.30 loads of trim and 12.03 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Seeing that packers have successfully procured cattle in both regions leads one to believe that prices don't stand much of a chance of changing. The bigger question following last week's dismal trade is how many cattle will packers buy this week? The market needs to see a strong movement as last week there were less than 49,000-head purchased.
FEEDER CATTLE:
Wednesday's acreage report sent bull-spreaders diving into the corn contracts where most of the nearby contracts closed limit up. USDA announced an estimated 92.7 million acres of corn have been planted in 2021, which is less than expected but up from the 90.82 million acres planted a year ago. The slower trading week throughout the cattle contracts didn't take the blow of the bullish crop report well in the feeder cattle arena as feedlots continue to wonder about input costs amid drought conditions, high hay prices and a fickle corn market. August feeders closed $2.77 lower at $154.62, September feeders closed $2.37 lower at $157.42 and October feeders closed $2.05 lower at $159.52. The feeder cattle contracts thus far throughout the week have traded mostly sideways, seeming to want to let the holiday pass before testing any new territory. The CME Feeder Cattle Index for June 29: up $0.38, $147.10.
LEAN HOGS:
The spot July lean hog contract closed modestly higher like the deferred contract did, but the August 2021 through December 2021 contracts all closed somewhat lower. Even though the lean hog market has faced fundamental challenges this week with a slower processing pace, the technical side of the market has support higher trade. July lean hogs closed $0.50 higher at $107.47, August lean hogs closed $0.37 lower at $103.25 and October lean hogs closed $0.47 lower at $87.27. Wednesday's slaughter ended up being better than anticipated as the market processed 470,000 head versus the estimated 462,000 head. With plants down this weekend in observation of the Fourth of July, it's relieving to see stronger daily speeds as opposed to weaker ones. On another note, it was interesting to see the day's cash hog market close over $2.00 higher as one would think that, ahead of the dark weekend, packers would be idle in the cash market, but we cannot overlook the fact that readily available hog supplies are still thin. Pork cutouts totaled 272.66 loads with 236.08 loads of pork cuts and 36.57 loads of trim. Pork cutout values: down $0.38, $113.84. Wednesday's slaughter is estimated at 470,000 head, 6,000 head less than a week ago and 1,000 head more than a year ago. The CME Lean Hog Index for June 28: down $1.19, $113.00.
THURSDAY'S CASH HOG CALL: Lower. With the market being one day closer to the weekend, I'd lean toward betting that, after Wednesday's aggressive dive in the cash hog market, packers are going to be less aggressive in Thursday's market.
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