GENERAL COMMENTS:
It was a good day for the livestock complex as the futures contracts continued with Monday's rally. The boxed beef market continues to see robust gains as demand is truly exceptional, but Tuesday's pork cutout value closed lower, with ham prices seeing the steepest regression. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.60 with a weighted average of $100.40 on 5,841 head. December corn is down 7 1/2 cents per bushel and December soybean meal is down $9.90. The Dow Jones Industrial Average is up 278.24 points and NASDAQ is up 80.22 points.
LIVE CATTLE:
In the week's grand scheme of things, the live cattle market successfully closed higher, making it the second day in a row of stronger closes thanks to a sky-rocketing boxed beef market and traders' willingness to invest in the futures market. August live cattle closed $1.12 higher at $123.25, October live cattle closed $0.87 higher at $128.15 and December live cattle closed $0.45 higher at $133.20. However, the market's lingering question continues to be, what will the cash cattle market do this week? Feedlots hope they'll finally be able to demand some $1.00 or $2.00 more in this week's market, but with packers able to rely on their grid and formula cattle, along with their forward bought purchases, Tuesday's cash cattle feedlots hold very little leverage in the market. It was a typical Tuesday where not much of anything developed throughout the cash cattle market other than a few head that traded in the Nebraska for $197, but there wasn't enough to say a trend has been established by any measure. Early asking prices have been noted in the South at $122-plus and in the North at $199-plus. Trade isn't expected to develop until midday Wednesday or later. Tuesday's CBP Texas Cash Pool listed 255 head which sold at $120, and the other bids were at $119.22 and $119.17.
Tuesday's slaughter is estimated at 122,000 head, 3,000 head more than a week ago and 6,000 head more than a year ago. Monday's cattle slaughter was revised to 116,000 head, which is 3,000 head less than what was originally stated.
Boxed beef prices closed higher: choice up $4.84 ($285.84) and select up $4.11 ($267.49) with a movement of 130 loads (66.79 loads of choice, 23.80 loads of select, 19.07 loads of trim and 20.05 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. As much as it pains me to type out the six letters of "steady," that's most likely where this week's market is going to fall. With boxed beef prices rallying, the cash cattle market should be seeing higher prices, but packers have found a way around supporting the cash market and don't mind letting it sit at steady week in and week out.
FEEDER CATTLE:
The feeder cattle market triumphed Tuesday's trade and closed modestly higher, as the support from weaker corn prices and a rallying live cattle market helped keep the market's morale rallying throughout the day. August feeders closed $0.65 higher at $158.90, September feeders closed $0.55 higher at $162.52 and October feeders closed $0.57 higher at $165.05. From tuning into the Superior Sale throughout the day, it's evident that demand has been absolutely stellar for the calves that have sold, and thankfully the market's higher tick in prices is surely adding more confidence to buyers' demeanor. With corn prices continuing their sideways chop, and with the April 2022 live cattle contract closing at just shy of $140 at $139.82, buyers are able to look confidently at this market and plan to lock in these higher prices, which the market hasn't seen in quite some time. The CME Feeder Cattle Index for Aug. 2: up $0.57, $156.15.
LEAN HOGS:
Pork cutout values weren't able to close higher, but with the price of ham dropping a staggering $18.74 to $99.01, it's hard for cutout prices to offset that big of a loss. But regardless of how the pork cutout values closed, the futures market still rallied into the day's close with all the nearby contracts adding at least $1.00 to the position. August lean hogs closed $1.57 higher at $109.07, October lean hogs closed $1.87 higher at $91.37 and December lean hogs closed $1.37 higher at $84.25. Helping the day's momentum was the fact that Tuesday's slaughter was back to normal production following Monday's lackadaisical processing pace. Even though pork cutout values closed lower, the market's underlying tone remains optimistic, and we have to keep in perspective that a choppy pork cutout value is to be anticipated while packers flush out product ahead of Labor Day. Pork cutouts totaled 308.57 loads with 283.44 loads of pork cutouts and 25.13 loads of trim. Pork cutout values: down $1.04, $127.67. Tuesday's slaughter is estimated at 475,000 head, 1,000 head more than a week ago and 10,000 head more than year ago. The CME Lean Hog Index for July 30: down $0.04, $112.04.
WEDNESDAY'S CASH HOG CALL: Steady. With pork cutout values closing higher Monday and then lower Tuesday, packers will likely be looking to pick up hogs in Wednesday's market for steady prices as opposed to diving into the market wildly and running up their cost.
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