GENERAL COMMENTS:
Both the lean hog and live cattle contracts were able have higher closes through the day's end, but that doesn't necessarily mean that the live cattle market will have an easy feat in the days ahead. The live cattle market will likely face technical pressure this week and, with boxed beef prices trailing lower, the cash cattle market will have a tough time keeping prices steady. Hog prices closed lower on the National Direct Afternoon Hog Report, down $4.12 with a weighted average of $107.74 on 2,905 head. December corn is up 16 cents per bushel and December soybean meal is up $3.60. The Dow Jones Industrial Average is up 126.02 points and NASDAQ is up 31.32 points.
LIVE CATTLE:
The live cattle complex did accomplish a higher close for the day, but it was troubling to see that the August live cattle contract was unable to close above the 40-day moving average. August live cattle closed $0.60 higher at $119.82, October live cattle closed $0.22 higher at $125.80 and December live cattle closed $0.47 higher at $131.37. With packers having bought upward of 82,000 head of cattle last week and 34% of them being for the deferred delivery, the nearby outlook for the live cattle market isn't a rosy one. New showlists appear to be mixed, higher in Nebraska and Colorado, but lower in Texas and Kansas. Monday's slaughter is estimated at 120,000 head, incomparable to a week ago and that's 5,000 head more than a year ago. Saturday's slaughter was revised to 88,000 head, which puts the week's estimated slaughter at 575,000 head. There were some cattle that traded in Nebraska for $125, but the cash cattle market isn't expected to really trade cattle until later in the week.
Last week's negotiated cash cattle trade totaled 82,381 head. Of that, 66% (54,483 head) were committed for the nearby delivery, while the remaining 34% (27,898 head) were committed for delivery in the following 15 to 30 days.
Boxed beef prices closed mixed: choice down $3.59 ($275.00) and select up $1.36 ($258.77) with a movement of 123 loads (83.81 loads of choice, 16.63 loads of select, 12.55 loads of trim and 9.62 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Steady. With the board showing a tough technical road to hoe, the market stands selling cash cattle steady at best this week as boxed beef prices continue to fall and packers sit on ample supplies of forward committed cattle.
FEEDER CATTLE:
The corn market's strong rally rocked the feeder cattle contracts back on their heels. The soon to be expiring July 2021 corn contract closed $0.39 higher and the rest of the nearby contracts closed anywhere from $0.14 to $0.16 stronger. So, throughout the day, not only did the feeder cattle market have the pressure of technical resistance looming at $160, but traders and cattlemen were also trying to gauge the sincerity of Monday's corn rally. The market has been able to rally here as of late on the corn market's deterioration, but if corn prices start to rally again, the market is likely to lose its steam. August feeders closed $1.02 lower at $158.15, September feeders closed $0.82 lower at $161.00 and October feeders closed $0.75 lower at $162.95. At Russell Livestock Auction in Russell, Iowa, compared to their last sale two weeks ago, steer calves weighing 450 to 550 pounds sold $5.00 higher and steers weighing over 550 pounds traded mixed as they ranged from $3.00 lower to $5.00 higher. Heifer calves weighing 400 to 650 pounds traded firm, and heifers weighing 650 to 800 pounds sold $7.00 higher. The CME Feeder Cattle Index for July 9: up $1.05, $153.82.
LEAN HOGS:
The lean hog market started the week out strong and luckily carried its positive momentum through Monday's close. August lean hogs closed $2.50 higher at $104.07, October lean hogs closed $1.90 higher at $87.32 and December lean hogs closed $2.10 higher at $81.15. The August contract has seemed to have found some support around the $100.00 threshold. Even though cash hog prices were lower Monday afternoon, the market could see a steady chop sideways throughout the early part of the week as pork cutouts closed higher and the futures market is summoning modest support. Processing speeds are expected to run at weaker levels as the number of market-ready hogs that the industry has grown accustomed to just aren't available. Pork cutouts total 279.39 loads with 248.64 loads of pork cuts and 30.75 loads of trim. Pork cutout values: up $1.29, $117.73. Monday's slaughter is estimated at 457,000 head, incomparable to a week ago and 8,000 head more than a year ago. The CME Lean Hog Index for July 8: down $0.03, $109.74.
TUESDAY'S CASH HOG CALL: Steady. Even though pork cutout prices are higher, packers aren't going to drive cash prices higher just for the fun of it and see profits lost out of their end margin.
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