GENERAL COMMENTS:
It was a mixed day for the livestock complex as the live cattle market aspired to trade fully higher, but the cash cattle market's lack of commitment waned on its rally. The feeder cattle contracts grew skeptical as the corn market flirted with higher prices and as the live cattle market couldn't signal full-throated support. And the lean hog complex had the toughest day as the market's deferred contracts continue to worry about long-term demand. Hog prices closed lower on the National Direct Afternoon Hog Report, down $1.74 with a weighted average of $103.80 on 7,936 head. December corn is up 2 3/4 cents per bushel, and December soybean meal is down $3.10. The Dow Jones Industrial Average is down 127.59 points, and the NASDAQ is up 102 points.
LIVE CATTLE:
The live cattle contracts gave the market all that they had through Wednesday's trade, but without having fundamental support from the cash cattle market, the market simply spun its wheels. August live cattle closed $0.15 higher at $123.07, October live cattle closed $0.10 higher at $128.52 and December live cattle closed $0.02 higher at $133.50. With boxed beef prices closing anywhere from $2 to $3 higher, the market should have been able to easily gain positioning on the board and add at least $1 if not $2 in the cash cattle market. Packers love seeing the dividends that these higher boxes are bringing in, but they are slow to negotiate any higher cash cattle trade. There were a handful of cattle that traded throughout the cash cattle market but not enough to say that any sort of a trend was established. Kansas saw a few head trade from $120 to $122, and Iowa saw a small sampling trade at $195. Interest should be more aggressive in Thursday's market. Wednesday's slaughter is estimated at 120,000 head -- 3,000 head more than a week ago and 1,000 head more than a year ago.
The Fed Cattle Exchange Auction listed a total of 7,773 head; of that, 1,085 sold, 181 were scratched from the auction and 6,507 head were listed as unsold, as they did not meet reserve prices, which ranged from $119 to $123. Opening prices ranged from $115 to $118; high bids ranged from $116 to $120. The state-by-state breakdown looks like this: Texas 7,463 total head, with 1,085 head sold at $119 to $120, 6,197 head unsold and 181 scratched from the auction; Kansas 310 total head, all of which went unsold.
Boxed beef prices closed higher: choice up $3.43 ($273.16) and select up $2.18 ($256.12) with a movement of 136 loads (76.68 loads of choice, 29.60 loads of select, 14.57 loads of trim and 15.22 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady to $1 higher. This week's cash cattle market has the chance to trade higher, but if it's going to champion higher prices, feedlots will have to be patient, and they will have to work together. If some feedlots start selling early and packers get close to 50,000 head (plus or minus) bought, then the market will most likely lose its chance to trade higher, as packers will step back and wait for the following week.
FEEDER CATTLE:
The feeder cattle contracts had high hopes for Wednesday's trade, but traders wouldn't dive into the complex while corn was flirting with the notion of trading higher. August feeders closed $0.52 lower at $160.17, September feeders closed $0.55 lower at $163.45 and October feeders closed $0.37 lower at $165.57. Throughout the countryside, the market's ambition hasn't eased up whatsoever, but technically speaking, the board is looking for strong signs in order to merit the higher trade the market yearns for. If the cash cattle market can prove that prices will be higher this week, then alongside stronger boxed beef prices, the feeder cattle contracts may feel safe in their upward quest. But, for now, the market's leeriness comes as the corn market could trade higher and as the cash cattle market hasn't committed itself to higher trade. At OKC West Livestock Auction in El Reno, Oklahoma, compared to last week, feeder steers sold $1 to $3 higher, and feeder heifers traded $3 to $5 higher. Steer and heifer calves under 500 pounds sold $6 to $8 higher, and those weighing heavier sold $2 to $5 higher. The market saw good demand throughout the entire sale but saw excellent interest in the lighter-weight calves. The CME feeder cattle index 7/27/2021: up $0.39, $154.36.
LEAN HOGS:
The lean hog complex closed lower as uncertainty pertaining to what the second half of 2021 will look like continues to undermine the market. August lean hogs closed $1.77 lower at $105.70, October lean hogs closed $3 lower at $89.52 and December lean hogs closed $2.70 lower at $82.15. Unfortunately, the questions the market keeps raising will only be able to be answered with time. Historically, hog supplies increase by September, and the market must navigate its way through the added tonnage. But supplies are thin heading into fall, and with a robust domestic consumer base and a lively export market, the market could fare better than what the board is showing at this point. More than anything, keeping close tabs on how supplies manage throughout the countryside will be incredibly important as well as consumer demand domestically and internationally. Pork cutouts total 284.96 loads with 256.46 loads of pork cuts and 28.51 loads of trim. Pork cutout values: up $1.48, $124.97. Wednesday's slaughter is estimated at 471,000 head -- 3,000 head less than a week ago and 5,000 head less than a year ago. The CME lean hog index 7/26/2021: down $0.07, $112.05.
THURSDAY'S CASH HOG CALL: Steady to somewhat lower. Packers have shown in recent weeks that they have grown comfortable buying aggressively in the early part of the week and then have let the latter part of the week coast on by. If Thursday's export report shows heightened demand, then packers may get anxious and buy a few more hogs in Thursday's market. Largely, prices will likely remain steady to somewhat lower, but the real question will be in the number of hogs they buy.
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