GENERAL COMMENTS:
Friday's livestock trade was lackadaisical, other than in the lean hog market. The live cattle market could have skipped Friday all together as the market faded lower and did diddly squat in the cash cattle market. The feeder cattle contracts didn't stand at chance at doing anything other than closing lower as the live cattle market offered no support and traders sidelined the market. Meanwhile, the market's eyes, ears and attention all fell on the lean hog market as Germany shared that they have two cases of Africa swine fever in their domestic herd. Demand hasn't been a problem for the U.S. pork market in recent months, but the news of more opportunity never disappoints a true entrepreneur. Hog prices closed lower on the National Direct Afternoon Hog Report, down $3.44 with a weighted average of $107.32 on 4,684 head. December corn is down 4 1/4 cents per bushel and December soybean meal is up $2.40. The Dow Jones Industrial Average is down 306.38 points and NASDAQ is down 118.90 points.
From Friday to Friday livestock futures scored the following changes: August live cattle up $0.95, October live cattle up $0.03; August feeder cattle down $3.55, September feeder cattle down $3.32; August lean hogs up $4.08, October lean hogs up $5.33.
LIVE CATTLE:
It was a doggish day for the live cattle market as futures scaled lower and the cash cattle market only saw a couple pens trade with the week's business was essentially done with. Unfortunately, when looking at the market technically, with both the August and October contracts closing below the market's 40-day moving average, pressure lingers above the live cattle market. With boxed beef prices still expected to drift lower until around Labor Day, the market could have some tough days ahead as packers have cattle committed as far out as the middle of August and won't be easily persuaded into paying higher cash cattle prices when boxed beef prices are on the downward slide. August live cattle closed $0.95 lower at $120.17, October live cattle closed $0.92 lower at $125.60 and December live cattle closed $0.47 lower at $131.32. This past week live cattle in the South traded for $119 to $120 (steady with last week's business) and Northern dressed cattle traded for $197 to $198 (roughly steady with last week's trend). As of Friday's afternoon USDA report, there were around 59,913 head that traded in the cash cattle market -- Monday's report will disclose the week's official movement.
Friday's slaughter is estimated at 118,000 head, 2,000 head less than a week ago and 3,000 head more than a year ago. Saturday's kill is projected to be around 56,000 head, 32,000 head less than a week ago and 8,000 head less than a year ago. This week's beef slaughter is estimated at 653,000 head, which is 7,000 head more than a year ago.
Boxed beef prices closed lower: choice down $1.93 ($267.94) and select down $0.69 ($251.79) with a movement of 143 loads (79.71 loads of choice, 31.65 loads of select, zero loads of trim and 31.69 loads of ground beef). Throughout the week choice cuts averaged $271.81 (down $11.23 from last week) and select cuts averaged $254.71 (down $6.01 from last week) with the week's total movement of cuts, grinds, and trim totaling 721 loads.
MONDAY'S CASH CATTLE CALL: Steady to $1.00 lower. With packers having cattle committed all the way through the middle of August, they are most likely going to continue to buy a handful of cattle in the cash cattle market in the weeks ahead to simply sure-up loose ends. But with boxes trailing lower, they aren't going to be proponents of the cash cattle market.
FEEDER CATTLE:
Rounding out the week, the feeder cattle contracts didn't have much ground to stand on, and consequently closed lower. August feeders closed $1.75 lower at $155.62, September feeders closed $0.72 lower at $158.50 and October feeders closed $0.72 lower at $160.47. Even though the corn market closed lower, the feeder cattle contracts weren't able to rally upon the weaker corn prices as traders opted to sit on the sidelines instead in Friday's trade. Next week's trade will likely be heavily influenced by the corn market again as the live cattle market isn't expected to off much support. This past week throughout the state of Oklahoma, compared to last week's average feeder steers and heifers sold $2.00 to $6.00 higher, with instances up to $8.00 higher. Demand was moderate to good for feeder cattle but very good for calves. Steer calves sold $4.00 to $10.00 higher, and heifer calves sold $5.00 to $10.00 higher. Slaughter cows sold $1.00 to $4.00 higher and slaughter bulls sold $2.00 higher with 65% of slaughter cows and bulls going to packers specifically. The CME Feeder Cattle Index for July 15: down $0.96, $151.39.
LEAN HOGS:
Demand hasn't been a problem in the hog market in the last seven months, but with the announcement that Germany now has a two cases of African swine fever in two domestic herds, U.S. pork supplies could be given more export opportunity even though our prices are high compared to other nations. Although cold storage supplies are greater than what they were back in January 2021, all of 2021 has trended at the lowest levels seen in the last 10 years for pork cold storage supplies. With supplies of market ready hogs anticipated to be slim through the remainder of the year, I'd expect volatile price swings in the market in the weeks and months ahead as export buying will likely come and go based on prices, and packers will only want to buy as much as necessary with supplies so thin. Upon hearing the news of Germany's ASF cases, the futures market jumped higher and rounded out the week optimistically. August lean hogs closed $1.35 higher at $105.65, October lean hogs closed $1.35 higher at $90.75 and December lean hogs closed $1.07 higher at $83.87. Pork cutouts totaled 230.81 loads with 202.75 loads of pork cuts and 28.06 loads of trim. Pork cutout values: up $0.42, $119.94. Friday's slaughter is estimated at 427,000 head, 36,000 head less than a week ago and 34,000 head less than a year ago. Saturday's kill is projected to be around 12,000 head - 43,000 head less than a week ago and 186,000 head less than a year ago. Thursday's hog slaughter was revised to 461,000 head - 5,000 head less than what was originally stated. The CME Lean Hog Index for July 14: up $0.34, $111.34.
MONDAY'S CASH HOG CALL: Higher. Given that packers were pretty quiet in the latter half of the week, it wouldn't be surprising to see them buying come Monday as they set out to commit supplies for the weeks ahead.
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