GENERAL COMMENTS:
It was another dull and unimpressive day for the livestock complex as the contracts rounded out the day mostly lower. Heading into Friday's market, it's likely that the same doggish tone is kept as traders seem unwilling to pay much attention to the livestock complex. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $10.86 with a weighted average of $119.59 on 4,816 head. December corn is up 16 cents per bushel and December soybean meal is down $7.10. The Dow Jones Industrial Average is up 313.89 points.
LIVE CATTLE:
With traders diving out of the live cattle market to the point where open interest sits at its lowest point since 2016, as you can imagine the nearby live cattle contracts continue to dig lower. August live cattle closed $0.62 lower at $136.17, October live cattle closed $0.50 lower at $141.82 and December live cattle closed $0.40 lower at $147.77. As the market trudges through the dog days of summer, it's tough to spout much of an optimistic story for the immediate future as boxed beef prices are under pressure and packers are playing the strongest hand of cards any poker dealer has ever seen. Until supplies become thinner, and packers get caught needing cattle, they'll likely continue to refuse to support the cash market through other arrangements. A few clean-up sales were reported throughout the countryside but largely the cash cattle market is done trading for the week. So far this week, a light trade has taken place in most areas with Northern dressed deals marked at mostly $225, $2 lower than last week's weighted average basis Nebraska. Southern live business has been marked at mostly $135, $1 lower than last week's weighted averages. Thursday's slaughter is estimated at 121,000 head, 2,000 head less than a week ago and 1,000 head more than a year ago.
Thursday's actual slaughter data shared that for the week ending 7/16/2022 steers averaged 889 pounds, which was down 1 pound from a week ago but was 1 pound heavier than a year ago. Heifers for the same week averaged 815 pounds, which is 1 pound more than a week ago but 2 pounds less than a year ago.
Beef net sales of 25,300 mt for 2022 were up 6% from the previous week and 66% from the prior four-week average. The three largest buyers were South Korea (7,900 mt), Japan (7,000 mt) and China (3,100 mt).
Boxed beef prices closed lower: choice down $0.22 ($267.77) and select down $1.00 ($240.81) with a movement of 99 loads (63.68 loads of choice, 15.08 loads of select, 10.50 loads of trim and 9.28 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Given that the week's business is appearing to be done with, it's unlikely that prices do anything but trade steady with the week's trend.
FEEDER CATTLE:
The corn market rounded out Thursday's trade fully higher, ranging anywhere from $0.14 to $0.16 stronger in its nearby contracts, which kept the feeder cattle contracts from developing any support technically. Even though feeder cattle demand continues to burn hot in sales scattered throughout the nation (as evidenced by the strong close in the feeder cattle index), the board doesn't seem to care as its only focus appears to be corn market's resurgence. August feeders closed $1.67 lower at $177.42, September feeders closed $1.65 lower at $180.20 and October feeders closed $1.75 lower at $182.72. At Winter Livestock Auction in Pratt, Kansas, compared to last week, feeder steers weighing 800 to 900 pounds sold $4.00 to $7.00 higher and feeder heifers weighing 800 to 950 pounds sold $3.00 to $5.00 higher. The CME Feeder Cattle Index for July 27: up $1.91, $172.55.
LEAN HOGS:
The lean hog market ended up closing mostly lower Thursday, with only the August contract able to close slightly higher. The cash market took a beating as it dropped $10.86 lower from Wednesday's close and only sold 4,816 head in the cash market, but given the drastic nature of the cash market, these type of weekly price swings have become the new normal. Nevertheless, the futures market closed lower even though pork cutout values were able to prove once again that consumer support is alive and well throughout the marketplace. Bellies once again led the pork cutout report with the biggest gain, jumping $7.19 higher from Thursday, but then was followed by a $4.68 gain in the loin. Pork cutouts total 223.14 loads with 196.84 loads of por cuts and 26.30 loads of trim. Pork cutout values: up $2.00, $128.79. Thursday's slaughter is estimated at 460,000 head, 19,000 head more than a week ago and 10,000 head less than a year ago. The CME Lean Hog Index for July 26: up $0.25, $119.73.
Thursday's actual slaughter data shared that for the week ending July 16, live weights averaged 284 (down 1 pound from the previous week) and dressed weights averaged 212 pounds (down 1 pound from the week before).
Pork net sales of 21,600 mt for 2022 were up 5% from the previous week, but down 16% from the prior four-week average. The three largest buyers were Mexico (13,100 mt), Japan (3,500 mt) and Canada (1,300 mt).
FRIDAY'S CASH HOG CALL: Lower. Given that packers showed little to no interest in Thursday's cash hog market, it's very unlikely that they do on Friday either, as it appears that they've bought up their needs for the week.
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