GENERAL COMMENTS:
The cattle contracts were able to rally into Monday's close as the market grew stronger amid a weak corn complex. Meanwhile, the nearby lean hog contracts drifted lower as the market saw a substantially smaller slaughter for the day. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.94 with a weighted average of $116.14 on 3,791 head. December corn is down 10 1/4 cents per bushel and December soybean meal is down $19.20. The Dow Jones Industrial Average is down 46.73 points.
LIVE CATTLE:
The live cattle market rallied on strong tones that the market left off on last Friday, and it felt comfortable keeping the complex mildly elevated Monday as boxed beef prices held strong and the day's slaughter ran aggressively. As the market wades through ample supplies of market-ready cattle, monitoring both boxed beef prices and slaughter speeds will remain incredibly important. If either of those key factors shows weakness, then the market's downside could be costly. If those key factors hold strong until market-ready supplies are worked through, and time passes to the later part of fall, then the market successfully avoided another hurdle. August live cattle closed $0.32 higher at $136.77, October live cattle closed $0.40 higher at $142.62 and December live cattle closed $0.35 higher at $148.50. The cash cattle market didn't see any action in Monday's market and it's likely that substantial trade doesn't develop until Wednesday or later as packers sit primarily flush with the numbers they need. New showlists appear to be mixed, somewhat higher in Nebraska/Colorado, but lower in Texas and Kansas.
Monday's slaughter is estimated at 124,000 head, steady with a week ago and 7,000 head more than a year ago.
Last week's negotiated cash cattle trade totaled 74,804 head. Of that, 67% (50,088 head) were committed for the nearby delivery, while the remaining 33% (24,716 head) were committed for the deferred delivery.
Boxed beef prices closed higher: choice up $1.36 ($270.60) and select up $0.65 ($242.90) with a movement of 99 loads (49.33 loads of choice, 29.81 loads of select, 6.75 loads of trim and 13.46 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Lower. Given that packers have cattle committed for this time and supplies still favor their position, it's likely that cattle trade for steady to $1.00 or $2.00 lower again this week.
FEEDER CATTLE:
Finally, the feeder cattle market caught a break from the ongoing rally that was pumping corn prices higher. The market gapped higher to start the week off as traders were anxious to take advantage of the market's opportunity. August feeder cattle closed $1.07 higher at $179.65, September feeders closed $1.55 higher at $183.10 and October feeders closed $1.75 higher at $185.47. Much of this week's fate will again lie in the hands of the grain complex. If grain prices remain weak, then the market stands a fight chance at rallying, but if corn prices rebound, the feeder cattle market stands little chance. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week and at the sale's midsession point, feeder steers were trading $3.00 to $5.00 higher, while feeder heifers were trading consistently $3.00 higher. Steer calves were trading $5.00 to $7.00 stronger, and heifer calves were selling $3.00 to $4.00 lower. The CME Feeder Cattle Index for July 29: up $2.43, $174.74.
LEAN HOGS:
The nearby lean hog futures closed lower while the deferred contracts were able to close slightly higher. The day's biggest distress stems from the measly 408,000 head that were processed. As packers continue to get jockeyed around in the cash market, they're looking to slow production speeds as a way to combat the higher cash market and as a way to ensure that they don't flood the product side of the market. August lean hogs closed $0.20 lower at $120.45, October lean hogs closed $0.40 lower at $96.82 and December lean hogs closed $0.12 lower at $87.72. Pork cutouts totaled 306.76 loads with 269.03 loads of pork cuts and 37.72 loads of trim. Pork cutout values: up $0.36, $127.70. Monday's slaughter is estimated at 408,000 head, 42,000 head less than a week ago and 6,000 head less than a year ago. The CME Lean Hog Index for July 28: up $0.84, $121.42.
TUESDAY'S CASH HOG CALL: Steady to somewhat higher. Monday's weak slaughter speeds is the wrinkle that could throw cash prices off. Prices will mostly likely trade higher this week, but when and how many will trade remain the question.
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