GENERAL COMMENTS:
It was a mixed week for the livestock complex as boxed beef demand should have spurred higher cash cattle trade, but the market didn't make the full connection. Feeder cattle prices continued to see robust interest from buyers in the countryside, but, technically, the market neglected to find the support it needed. In the lean hog market, a sideways trending pork cutout value didn't add much gusto the futures market trade. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.88 with a weighted average of $101.70 on 3,010 head. December corn is down 11 1/4 cents per bushel and December soybean meal is down $5.50. The Dow Jones Industrial Average is down 149.19 points and NASDAQ is down 105.58 points.
From Friday to Friday, livestock futures scored the following changes: August live cattle up $0.58, October live cattle up $0.05; August feeder cattle down $1.90, September feeder cattle down $0.72; August lean hogs down $1.15, October lean hogs down $4.60.
LIVE CATTLE:
Every Monday and Thursday, all the analysts at DTN get together on a call to discuss the market's developments. On one particular call, I remember DTN Lead analyst Todd Hultman saying, "Don't ever get too confident in the fundamental windshield, because it changes before your eyes." And as we look at the upcoming months of 2021 and how the cattle market should perform, I don't think anything could be more true -- especially in the case of the cash cattle market.
This past week, boxed beef prices traded positively as pre-Labor Day buying has retailers prepping their coolers and we will likely see stronger prices for at least the next week or two. So, as we analyze the "fundamental windshield," one would naturally think that heightened demand and thinner supplies would yield a stronger cash cattle market as packers need the cattle -- but guess again my friends.
This past week's cash cattle market was a pitiful and lousy example of what the cash cattle market should be amid stronger consumer demand and rallying box prices. Friday's afternoon reports shared that, throughout the entire nation, only 53,512 head of cattle were traded in the cash cattle market. Southern cattle this past week traded at mostly $120, which was $1.00 stronger than last week, and Northern dressed cattle traded at mostly $196, which is roughly steady.
August live cattle closed $0.42 lower at $122.07, October live cattle closed $0.95 lower at $127.20 and December live cattle closed $0.62 lower at $132.65. Friday's slaughter is estimated at 114,000 head, 4,000 head more than a week ago and 3,000 head more than a year ago. Saturday's kill is projected to be around 58,000 head. This week's total slaughter is estimated at 649,000 head, which is 1,000 head more than a week ago and 13,000 head more than a year ago.
Boxed beef prices closed higher: choice up $3.24 ($278.46) and select up $2.37 ($259.19) with a movement of 117 loads (60.79 loads of choice, 25.04 loads of select, 22.36 loads of trim and 8.60 loads of ground beef). Throughout the week choice cuts averaged $272.90 (up $7.02 from last week) and select cuts averaged $255.40 (up $6.09 from last week) with a total movement of cuts, grinds and trim of 628 loads.
MONDAY'S CASH CATTLE CALL: Steady. With packers having cattle committed for the weeks ahead, there's little hope that the cash cattle market will be able to demand higher prices unless packers simply offer up charity bids.
FEEDER CATTLE:
The feeder cattle complex didn't gain any support by the day's close, but the market does like to see that the corn market waned lower with fears of rain in the forecast. Feedlots would gladly take lower corn prices and they may even breakout some colorful dance moves for a good rain, as deteriorating pasture conditions continue to plague cattlemen in the West. August feeders closed $0.32 lower at $158.17, September feeders closed $0.15 lower at $161.80 and October feeders closed $0.15 lower at $164.05. Even though the futures market didn't accomplish much throughout the week, the strength in feeder cattle prices remained strong this past week. Buyers are constantly analyzing their breakevens but continue to see the optimism built into the next year's fat cattle market, and so long as the April 2022 live cattle contract continues to trade close to $140, buyers will likely stay aggressive. Looking to next week's trade, the market will be glued to watching how Superior's Video Royale sale does in Winnemucca, Nevada, as there are roughly 184,000 head of cattle consigned to the sale. Oklahoma's Weekly Cattle Auction Summary shared that throughout the entire state, and compared to last week, feeder steers sold steady to $3.00 higher and feeder heifers sold $2.00 to $5.00 higher. Steer calves sold $4.00 to $6.00 stronger, and heifer calve traded steady to $5.00 higher. Slaughter cows sold $1.00 to $5.00 higher this last week with instances up to even $11.00 stronger, slaughter bulls sold $1.00 to $4.00 higher. The CME Feeder Cattle Index for July 29: up $0.04, $154.04.
LEAN HOGS:
Even though the futures market petered out as the week grew long, it was far from a boring week in the hog world. Heading into next week's trade, continuing to watch how slaughter speeds fare will be on the forefront of everyone's mind as supplies are becoming easier for packers to secure. Secondly, the market has a balancing act to manage with pork cutout prices. High pork prices seem stimulating, but when it comes to exports, they can be costly. Monitoring the market to make sure no more news breaks about African swine fever will continue to be an issue that needs closely monitored. August lean hogs closed $0.10 lower at $106.20, October lean hogs closed $0.95 lower at $88.02 and December lean hogs closed $0.75 lower at $81.65. Pork cutouts totaled 266.96 loads with 246.11 loads of pork cuts and 20.86 loads of trim. Pork cutout values: up $0.02, $123.89. Friday's slaughter is estimated at 439,000 head, 5,000 head more than a week ago and 35,000 head more than a year ago. This week's total slaughter is estimated at 2,327,000 head, 5,000 head less than a week ago and 210,000 head less than a year ago. The CME Lean Hog Index for July 28: up $0.08, $112.02.
MONDAY'S CASH HOG CALL: Lower. With pork cutout values closing a slim $0.02 higher, packers are going to be cautious about diving into the cash hog market as they'll want to see how next week's demand appears and they know that finding hogs is getting easier to do as more hogs are becoming available.
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