GENERAL COMMENTS:
It was a busy Monday throughout the futures complex as the cattle contracts jumped into the new week ready to blaze new trails and demand trader interest. Early in the day, the lean hog contracts weren't able to summon any support, but as the market closed and fundamental backing shined through, the nearby contracts closed higher. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.40 with a weighted average of $105.99 on 7,560 head. December corn is up 3 3/4 cents per bushel and December soybean meal is down $1.10. The Dow Jones Industrial Average is up 82.76 points and NASDAQ is up 3.72 points.
LIVE CATTLE:
Live cattle futures didn't waste any time Monday and jumped higher on support from Friday's strong fundamental reports, including the latest Cattle on Feed report and bi-annual Cattle Inventory report. With corn prices trending lower (even though they closed just slightly above steady Monday afternoon) and boxed beef prices finding support -- the market feels charged and fully supported with strong backing. August live cattle closed $1.95 higher at $123.45, October live cattle closed $2.05 higher at $129.20 and December live cattle closed $1.67 higher at $133.97. Packers only bought a dismal 76,804 head of cattle last week in the negotiated cash cattle market, but feedlots have been paying close attention to the market's recent developments and intend to push prices higher this week. Packers obviously won't like the idea of paying more for cash cattle but when boxed beef prices are finding support once again, it's a challenge that feedlots deem worthy of taking on. New showlists appear to be somewhat larger in Texas, larger in Kansas but smaller in Nebraska/Colorado. Monday's slaughter is estimated at 119,000 head -- 4,000 head more than a week ago and 2,000 head more than a year ago. Friday's cattle slaughter was revised to 110,000 head -- that's 4,000 head less than what was originally stated. Saturday revised week to date cattle slaughter totaled 648,000 head.
Last week's negotiated cash cattle trade totaled 76,804 head. Of that, 73% (56,040 head) were bought for nearby delivery while the remaining 27% (20,764 head) were bought with delivery for the following 15 to 30 days.
Boxed beef prices are higher: choice up $1.30 ($267.93) and select up $0.98 ($250.92) with a movement of 106 loads (65.94 loads of choice, 21.80 loads of select, 9.68 loads of trim and 8.91 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Higher. With plenty of supportive signs pinging throughout the cattle market, feedlots are going to stick to their guns this week and try to move the market at least $1.00 to $2.00 higher.
FEEDER CATTLE:
Feeder cattle futures rallied throughout Monday and closed substantially higher amid the corn market's dismal close, up only 2 to 4 cents. August feeders closed $2.12 higher at $162.20, September feeders closed $2.30 higher at $164.82 and October feeders closed $1.95 higher at $167.25. There was concern the August contract would be pressured to be close below resistance at $160.00 if the market wasn't strong enough to sustain the new levels. But the market had ample support and had no problem closing above $162, let alone maintaining $160. At Sioux Falls Regional Cattle Auction in Worthing, South Dakota, feeder steers sold $5.00 to $9.00 higher compared to last week, with the exception of those weighing 900 to 950 pounds which sold $1.00 to $2.00 lower. Feeder heifers sold $8.00 to $12.00 higher except those weighing 950 to 1,000 pounds which traded $4.00 to $5.00 lower. Buyers are continuing to come to the sale week-in and week-out amid these lower corn prices and are ready to get their orders filled. The CME Feeder Cattle Index 7/23/2021: up $1.82, $153.85.
LEAN HOGS:
By Monday's close, the lean hog complex was able to muster up enough support to closed mixed. Early in the day, the lean hog contracts failed to pull in any trader interest as the cattle market was stealing front and center stage. But by the day's end lean hog nearby contracts closed mostly higher. August lean hogs closed $0.05 higher at $107.40, October lean hogs closed $0.47 higher at $93.10 and December lean hogs closed $0.05 lower at $85.52. Largely the market needed to see how the day's pork cutout value was going to close and wanted to see where Monday's slaughter figure would land. With pork cutout values closing slightly higher once again and with Monday's slaughter being steady with the market's recent behavior, traders felt and that enough support backed the market. Pork cutouts totaled 300.24 loads with 281.92 loads of pork cuts and 18.33 loads of trim. Pork cutout value: up $0.57, $122.94. Monday's slaughter is estimated at 468,000 head -- 11,000 head more than a week ago and 12,000 head more than a year ago. The CME Lean Hog Index 7/22/2021: down $0.04, $112.21.
TUESDAY'S CASH HOG CALL: Higher. It was surprising to see packers so aggressive in Monday's cash hog market; that most likely means they need hogs and have intentions of keeping hogs close to the knife throughout the week.
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