GENERAL COMMENTS:
Feedlots are sticking to their guns this week and are going to make packers pay their full asking price in order to buy cattle. At this point, the market still hasn't really see any cattle trade, meaning that Thursday's market is going to be a firecracker once trade does start. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $2.15 with a weighted average of $131.34 on 24,921 head. December corn is up 1 3/4 cents per bushel and December soybean meal is up $4.50. The Dow Jones Industrial Average is down 171.69 points.
LIVE CATTLE:
Feedlots are using the old "sweat them out approach" as they hold packers' feet to the fire and are mostly holding out for higher prices. There's been a handful of cattle traded so far this week, but certainly not enough to say that any have really traded or that any trend has been set. As far as the eye can see, the market has supportive cues backing its higher climb. First, the futures market is all in on this move. August live cattle closed $0.45 higher at $141.75, October live cattle closed $0.17 higher at $145.85, and December live cattle closed $0.30 higher at $151.50. Second, boxed beef prices are holding their own as choice cuts are in thin supply and continue to see gradual day after day price increases while select cuts of greener cattle are more readily available and continue to regress slightly. Lastly, processing speeds continue to run at a snappy pace. Vigorous throughput has allowed feedlots to regain leverage and remains a critical factor moving forward.
Wednesday's slaughter is estimated at 126,000 head, steady with a week ago but 6,000 head more than a year ago.
Boxed beef prices closed mixed: choice up $0.98 ($265.44) and select down $0.60 ($239.12) with a movement of 161 loads (86.31 loads of choice, 25.77 loads of select, 26.53 loads of trim and 21.91 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: $2.00 to $3.00 higher. If feedlots have waited this long to trade cattle, they know they can get their full asking price, and potentially even some more. Asking prices in the South remain firm at $143 to $145, and in the North at $240-plus.
FEEDER CATTLE:
The corn complex rounded out Wednesday's trade steady to $0.04 higher in its nearby contracts, but that didn't slow down the feeder cattle market's momentum. August feeders closed $1.72 higher at $183.25, September feeders closed $1.65 higher at $187.12 and October feeders closed $1.52 higher at $189.55. The corn market's steady to $0.04 run wasn't enough to derail the feeder cattle market as the cash cattle complex has yet to really trade any cattle, the live cattle contracts are all rallying and the late 2022 early 2023 feeder cattle contracts are narrowing the spread between their current price point and $2.00. It's important to note that the October 2022 feeder cattle contract jumped to $189.55, which is a new contract high. At Winter Livestock Auction in Dodge City, Kansas, compared to last week, feeder steers and feeder heifers weighing 650 to 950 pounds traded $2.00 to $6.00 higher. Steer and heifer calves weighing 400 to 650 pounds traded $3.00 to $10.00 higher. Slaughter cows sold $3.00 to $4.00 lower, and slaughter bulls sold $10.00 lower. The CME Feeder Cattle Index for Aug. 16: up $0.54, $179.89.
LEAN HOGS:
After closing lower Tuesday afternoon, the lean hog complex was able to regain some positioning in Wednesday's market as resistance pressure was no longer an immediate concern. October lean hogs closed $1.47 higher at $98.05, December lean hogs closed $0.72 higher at $88.42 and February lean hogs closed $0.85 higher at $91.10. Unfortunately, the pork cutout value did show weakness at Wednesday's end, as it closed $2.68 lower, with belly cuts pulling the market down the most with a $12.28 cut, but the rib did see a $5.86 regression too. Cash hog prices were astonishing as prices again jumped $2.15 higher, to average $131.34 on 24,234 head. Pork cutouts total 272.98 loads with 245.13 loads of pork cuts and 27.85 loads of trim. Pork cutout values: down $2.68, $118.47. Wednesday's slaughter is estimated at 478,000 head, 4,000 head more than a week ago and 5,000 head more than a year ago. The CME Lean Hog Index for Aug. 15: down $0.65, $121.06.
THURSDAY'S CASH HOG CALL: Lower. Given that hog prices were supported on both Tuesday and Wednesday, it's likely that the market sees very little interest come Thursday.
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