GENERAL COMMENTS:
It was a powerful day for the livestock complex, but an extremely good day for the feeder cattle market. As corn prices trended lower throughout the day, the contracts all celebrated the notion of lower feed costs. Hog prices closed $1.59 lower on the Daily Direct Afternoon Hog Report, equating to a weighted average of $122.84 on 6,700 head. December corn is down 2 3/4 cents per bushel and December soybean meal is down $6.00. The Dow Jones Industrial Average is up 29.07 points.
LIVE CATTLE:
The live cattle market didn't crash into Monday's trade as aggressively as the feeder cattle complex did, but feedlots are soberly aware that this week's trade is important and will be a battle of the minds between them and packers. As feedlot managers evaluate Monday's trade, they're thankful to see the board's minor support, but even more thankful to see Monday's slaughter near 120,000 head and that corn prices closed slightly lower and that boxed beef prices printed higher. It's been right at six weeks since the fat cattle market had traded over 100,000 head and last week's movement was incredibly telling that packers got caught in a short-bought position. The question that remains unanswered at this point. however, is: did they get enough cattle bought last week or are they still in need? Stronger box prices will motivate packers to give more money if they have to. August live cattle closed $0.47 higher at $138.35, October live cattle closed $0.35 higher at $144.22 and December live cattle closed $0.47 higher at $150.45.
Monday's slaughter is estimated at 119,000 head, 5,000 head less than a week ago but 6,000 head more than a year ago. New showlists appear to be, mixed lower in the South, but higher in Nebraska and Colorado.
Last week's stronger cash cattle trade helped awaken the bulls of the market and, given that feedlots have recently been reminded that they can trade cattle higher, their ambitions this week is to do exactly the same. New showlists appear to be, mixed lower in the South, but higher in Nebraska and Colorado.
Last week Southern live deals had a range of $135 to $138.50, mostly $135 to $136, steady to $1 higher than the prior week's weighted averages. Northern dressed business had a rather large range of $224 to $232, mostly $225 to $227, steady to $2 higher than the previous week's weighted average basis Nebraska. Last week's negotiated cash cattle trade totaled 102,980 head. Of that, 68% (70,046 head) were committed for the nearby delivery, while the remaining 32% (32,934 head) were committed for the deferred delivery.
Boxed beef prices closed higher: choice up $1.62 ($266.24) and select up $0.19 ($238.86) with a movement of 105 loads (50.23 loads of choice, 22.47 loads of select, 17.38 loads of trim and 15.01 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: $1.00 higher. It's unlikely that much trade develops on Tuesday as feedlots are going to want to push this week's trade out until packers start to get hot and antsy feet, but when trade does develop it could be steady to $1.00 higher.
FEEDER CATTLE:
Talk about a move and shake kind of Monday, as the feeder cattle complex barreled into the new week. As more traders move from the August contract and into the September and October months, those contracts are fulfilling their chart patterns and seeing near technical dreams come true. September feeders closed $2.22 higher at $185.65, October feeders closed $1.75 higher at $187.70 ad November feeders closed $1.40 higher at $189.07. The September contract moved to the highest point it's been since late February, and still has plenty of upward room to grow into. If corn prices can maintain a steady to somewhat lower trend, then the feeder cattle market is sitting ripe for a rally. Not to mention, if the live cattle market/fat cattle market can grow stronger in its own pursuit, then that only adds more gas to the feeder cattle market's flame. At Joplin Regional Stockyard in Carthage, Missouri, compared to last week, feeder steers traded steady to $4.00 lower but feeder heifers traded $3.00 to $8.00 higher with the biggest gains seen on the weight groups under 575 pounds. The CME Feeder Cattle Index for Aug. 5: unavailable at this time.
LEAN HOGS:
The lean hog market had a tremendous technical day as the market broke through resistance and closed the highest it's been since mid-April. The market jumped higher as corn prices closed slightly lower and last week's strong momentum carried into this week's start. Packers are balancing the fact that pork demand has seen fairly steady interest, which pushes their needs to continue to support the cash market, all while not getting too aggressive and driving prices up for the sake of have comfort in numbers. Monday's market didn't see much cash interest and given how thin supplies are, it would be unlikely to see this week's market perform like last when there was only one big trading day of the week. October lean hogs closed $1.90 higher $100.30, December lean hogs closed $0.90 higher at $89.72 and February lean hogs closed $0.55 higher at $91.85. Pork cutouts total 262.83 loads with 218.25 loads of pork cuts and 44.58 loads of trim. Pork cutout values: down $0.97, $124.06. Monday's slaughter is estimated at 458,000 head, 50,000 head more than a week ago and 2,000 head more than a year ago. Friday's slaughter was revised to 452,000 head. The CME Lean Hog Index for Aug. 4: up $0.48, $122.09.
TUESDAY'S CASH HOG CALL: Steady. It wouldn't be surprising to see most of the week's trade wait to develop until Wednesday as then packers will have a better gauge on demand.
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