GENERAL COMMENTS:
It was a strange day for the futures market as funds were Leary of what the Delta variant of COVID-19 could mean for the marketplace and for the economy as a whole. Nevertheless, the contracts were extremely hesitant early in Monday's trade, but the cattle contracts were able to gain a little support by the day's close. Hog prices closed lower on the National Direct Afternoon Hog Report, down $1.08 with a weighted average of $106.24 on 3,980 head. December corn is up 1/4 cent per bushel and December soybean meal is steady. The Dow Jones Industrial Average is down 774.91 points and NASDAQ is down 176.80 points.
LIVE CATTLE:
The live cattle market was able to muster some support before the day's close, which comes an as utter surprise given the fact that boxes continue to scale lower and that the cash cattle market doesn't have a lot of hope for the weeks ahead. August live cattle closed $0.07 higher at $120.25, October live cattle closed $0.50 lower at $125.10 and December live cattle closed $0.20 lower at $131.12. The fact that the spot August contract was able to close (barely) above the 100-day moving average of $119.89 is positive, even though pressure will continue to haunt the market. It's a given that through this time -- known as "the dog-days of summer" in the cattle market -- the live cattle market will be tested. But as boxed beef prices dwindle, feedlots desperately hope that packers continue to run processing speeds at current levels so that ample supplies don't become an issue later down the road. Monday'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. This week's slaughter is likely to come in lighter than last week's 653,000 head as a major plant has intensions to be dark on both Friday and Saturday, and another plant intends to be dark next weekend. Showlists this week are smaller in Texas and Kansas, but larger in Nebraska/Colorado.
Last week there were 75,811 of cattle that traded through the negotiated cash cattle market. Of that 62% (47,149 head) were purchased for the nearby delivery, while the remaining 38% (28,662 head) were purchased for the deferred delivery.
Boxed beef prices closed lower: choice down $1.45 ($266.49) and select down $2.30 ($249.49) with a movement of 125 loads (62.38 loads of choice, 33.96 loads of select, 9.27 loads of trim and 19.19 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Steady. With packers having forward bought supplies, their need to support the cash cattle market is slim.
FEEDER CATTLE:
The feeder cattle complex grew stronger as Monday's afternoon traded on and ultimately ended up closing higher. August feeders closed $1.75 higher at $157.37, September feeders closed $0.55 higher at $159.05 and October feeders closed $0.37 higher at $160.85. Some of what encouraged the feeder cattle complex was the strong demand for calves that continued to cling to the market despite the futures market uncertainty. In watching some of Northern Livestock Video Auction's sale, it was apparent that buyers weren't leery of the market at the least bit and continued to buy cattle with sheer confidence. But when buyers look at the live cattle market, it's hard not be encouraged that all of 2022 is trading above $130.00. The CME Feeder Cattle Index for July 16: down $0.66, $150.73.
LEAN HOGS:
The cattle contracts found some support by Monday's close, but the lean hog market wasn't quite as fortunate. August lean hogs closed $1.17 lower at $104.47, October lean hogs closed $1.37 lower at $89.37 and December lean hogs closed $0.82 lower at 83.05. Even though Monday's slaughter was 8,000 head more than last week's marks, 457,000 head still huge. Packers are going to try to gauge domestic demand and export opportunities all while meticulously examining their cash hog expenses. Packers want to be ready to capture any opportunity that sifts their way, but they know it's a fine balance of gauging demand and not overpaying in the cash market to where their added profits dissipate. Monitoring pork cutout values and daily slaughter speeds will help us determine their need to buy in the cash hog market. Pork cutouts totaled 249.92 loads with 228.12 loads of pork cuts and 21.81 loads of trim. Pork cutout values: up $1.91, $121.85. Monday's slaughter is estimated at 457,000 head, 8,000 head more than a week ago and 12,000 head less than a year ago. The CME Lean Hog Index for July 15: up $0.55, $111.89.
TUESDAY'S CASH HOG CALL: Steady to somewhat higher. Seeing that Monday's slaughter was a more aggressive than last week and that pork cutout prices closed higher, packers may be willing to be more aggressive in Tuesday's cash hog market.
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