GENERAL COMMENTS:
Thursday was a winning day for the cattle contracts as both the live and feeder cattle futures closed higher, celebrating a strong export report and a weaker corn market. The lean hog market's rally came to a bitter end, though, as the market didn't find the support it was hoping to see on the export report. Hog prices closed lower on the National Direct Afternoon Hog Report, down $1.47 with a weighted average of $105.31 on 6,601 head. December corn is down 7 1/4 cents per bushel and December soybean meal is down $8.00. The Dow Jones Industrial Average is up 25.35 points and NASDAQ is up 52.65 points.
Thursday's Cold Storage Report showed total red meat supplies in freezers were down 4% from the previous month and down 8% from last year. Total pounds of beef in freezers were down 4% from the previous month and down 7% from last year. Frozen pork supplies were down 4% from the previous month and down 4% from last year. Stocks of pork bellies were up slightly from last month but down 32% from last year.
LIVE CATTLE:
What a day for live cattle market. Upon juggling the findings of the Cold Storage report, to seeing higher boxed beef prices but lower cash cattle prices and dismal chain speeds -- the live cattle market had a lot to absorb throughout Thursday. August live cattle closed $0.75 higher at $120.80, October live cattle closed $1.42 higher 126.67 and December live cattle closed $0.80 higher at $131.85. There was light to moderate trade in the cash cattle market with Northern dressed cattle selling anywhere from $194 to $200, but mostly at $195 which is $3.00 lower than last week's weighted average. Southern live cattle traded anywhere from $117 to $119, mostly at $119 which is $1.00 lower than last week. Of the dressed cattle that were purchased, a lot sold with delayed delivery for the weeks of Aug. 2 and Aug. 16. Thursday's slaughter is estimated at 118,000 head -- 1,000 head less than a week ago and 2,000 head less than a year ago.
It was interesting to note in Thursday's Cold Storage Report, total supplies of beef at the lowest levels they've been at in the last seven years. Don't forget Friday will be a big day for the market as both the monthly Cattle on Feed report and the bi-annual Cattle Inventory report will be released.
Beef net sales of 25,100 metric tons (mt) reported for 2021 were up noticeably from the previous week and up 63% from the prior four-week average. The three largest buyers were South Korea (8,600 mt), Japan (5,200 mt) and China (4,100 mt).
Thursday's actual slaughter data for the week ended 7/10/2021 saw cattle slaughter at 580,744 head and both steer and heifer weights grew by a pound from the previous report. Steers increased by a pound to average 885 pounds, and heifers jumped one pound to average 812 pounds.
Boxed beef prices closed higher: choice up $0.90 ($266.14) and select up $1.00 ($249.77) with a movement of 118 loads (71.99 loads of choice, 22.93 loads of select, 4.83 loads of trim and 17.76 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. With cash cattle already trading in both the North and the South, prices will likely remain where they are.
FEEDER CATTLE:
The corn market was bearish all Thursday and that was the green light the feeder cattle market was looking for. August feeders closed $1.42 higher at $158.20, September feeders closed $1.40 higher at $160.70 and October feeders closed $1.52 higher at $162.62. The spot August contract is going to come up against resistance at $160.00, while all its counterparts are trading at levels beyond that threshold currently. The market stands a fair chance at testing resistance if the corn market continues to trade lower and if traders are willing to extend their positions. The market's support throughout the countryside continues to flourish as buyers want calves and feeders alike and are willing to pay up for them. At Winter Livestock Auction in Pratt, Kansas, compared to last week feeder steers weighing 500 to 900 pounds sold $5.00 to $6.00 higher. Steers weighing 900 to 1,000 pounds sold $6.00 to $8.00 higher. Feeder heifers weighing 650 to 950 pounds sold $2.00 to $5.00 higher. Heifer calves weighing 500 to 650 pounds sold $7.00 to $10.00 higher. The CME Feeder Cattle Index 7/21/2021: up $0.68, $151.39.
LEAN HOGS:
Thursday never gave the lean hog market much of chance at trading higher. Upon seeing a dismal export report, the market veered lower and ultimately ended up closing lower in all the contracts other than spot August. August lean hogs closed $0.07 higher at $106.65, October lean hogs closed $0.67 lower at $91.72 and December lean hogs closed $0.32 lower at $85.00. Even though the cash hog market closed lower, and Thursday was a little disappointing to the market as China wasn't a buyer on the export report, packers still showed modest aggression in the day's cash hog trade as they purchased right at 6,601 head. If they had all their needs met it would have been more usual to see the day close with only 2,500 to 4,000 head selling in the cash market. Thankfully, the higher prices from the pork cutout values have kept packers engaged with the market and will likely continue to do so throughout the remainder of the year as supplies will be thin. Pork cutouts total 279.53 loads with 258.22 loads of pork cuts and 21.31 loads of trim. Pork cutout values: up $0.22, $122.31. Thursday's slaughter is estimated at 469,000 head -- 8,000 head more than a week ago and 1,000 head less than a year ago. The CME Lean Hog Index 7/20/2021: up $0.01, $112.34.
Thursday's actual slaughter data for the week ended 7/10/2021 showed live hog weights remained steady from the previous week at 281 pounds, and dressed weights grew by a pound to average 210 pounds.
Pork net sales of 24,500 mt reported for 2021 were up noticeably from the previous week, but down 12% from the prior four-week average. The three largest buyers were Mexico (10,000 mt), Japan (5,200 mt) and Canada (4,000 mt).
FRIDAY'S CASH HOG CALL: Lower. As packers head into the weekend, they likely won't support the cash hog market much and will rather pick up the hogs they need early next week.
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