GENERAL COMMENTS:
The live cattle market rounded out the day with a slightly higher close with the feeder cattle and lean hog contracts remaining pressured through closing. It's likely that the hog complex sees more support in Tuesday's market as packers will likely show interest in the cash market, but the feeder cattle market's fate largely depends on what the corn market does. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.29 with a weighted average of $117.19 on 4,915 head. December corn is up 19 1/2 cents per bushel and December soybean meal is up $17.10. The Dow Jones Industrial Average is up 90.75 points.
LIVE CATTLE:
Despite corn being higher and total open interest taking a royal beating, the live cattle contracts managed to defend a slightly higher close by Monday's end. August live cattle closed $0.37 higher at $137.75, October live cattle closed $0.35 higher at $143.35 and December live cattle closed $0.45 higher at $148.62. Even with the futures market charging higher and close to prices not seen since early June, it's unlikely that the cash cattle market performs well this week as packers have supplies committed to them for this time. New showlists appear to be mixed, higher in Kansas, somewhat lower in Texas and lower in Nebraska/Colorado.
Monday' slaughter is estimated at 124,000 head, 1,000 head less than a week ago and 6,000 head more than a year ago.
Throughout last week, Southern live deals were marked at mostly $136, roughly $0.50 lower than last week's weighted averages. While Northern dressed business came in at mostly $227, $2 lower than last week's weighted average basis Nebraska. Last week's negotiated cash cattle trade totaled 69,032 head. Of that, 65% (45,034 head) were committed for the nearby delivery, while the remaining 35% (23,998 head) were committed for the deferred delivery.
Boxed beef prices closed higher: choice up $0.99 ($268.11) and select up $2.50 ($245.00) with a movement of 90 loads (47.81 loads of choice, 16.53 loads of select, 15.90 loads of trim and 9.80 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Lower. Given that packers still possess most of the market's leverage and that they've strategically padded themselves with supplies for this time, the cash market will likely be lower again this week.
FEEDER CATTLE:
The grain market's power throughout Monday's trade helped propel the corn market higher, which deemed a lower close for feeder cattle. August feeders closed $2.25 lower at $179.30, September feeders closed $1.80 lower at $182.67 and October feeders closed $1.75 lower at $185.25. With Friday's higher close, the Monday's retraction didn't amount to much more than given away some of what Friday claimed. The market is still far from testing its breakout plane, which remains at $176. If the market only had to shake the bearish news of Friday's Cattle on Feed report, then it could potentially begin to trade higher on Tuesday or Wednesday depending on what the corn market does, but with interest rates expected to be raised again on Wednesday, pressure may still exist. At Joplin Regional Stockyard in Carthage, Missouri at their midsession point compared to last week feeder steers were trading $2.00 to $6.00 higher and feeder heifers were trending $4.00 to $7.00 higher. The CME Feeder Cattle Index for July 22: down $1.99, $171.01.
LEAN HOGS:
The lean hog complex was able to pull itself out of the lower trend that settled into the market before noon in its nearby contracts, but the market's deferred contracts didn't have any problems closing $0.65 to $1.15 higher by the day's end. It's supportive to see that pork cutout prices rounded out the day higher, which should give Tuesday a batting chance at higher trade. It's likely that the cash market sees better interest from packers on Tuesday and Wednesday as they've been consistently buying hogs two days out of the week. August lean hogs closed $1.47 lower at $117.22, October lean hogs closed $2.20 lower at $94.12 and December lean hogs closed $0.27 lower at $86.25. Pork cutouts total 289.47 loads with 252.68 loads of pork cuts and 36.79 loads of trim. Pork cutout values: up $1.85, $127.82. Monday's slaughter is estimated at 450,000 head, 1,000 head more than a week ago and 17,000 head less than a year ago. The CME Lean Hog Index for July 21: up $1.18, $118.22.
TUESDAY'S CASH HOG CALL: Higher. It's likely that Tuesday's cash hog market is higher given how few market-ready hogs there are, but how much higher remains the wild-card question of the week.
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