GENERAL COMMENTS:
Livestock futures trading volume has been light so far on Wednesday, so the live cattle, feeder cattle and hog futures contracts have all stuck with the higher direction they took at the morning. September corn is up 13 1/4 cents per bushel and August soybean meal is up $13.90 per ton. The Dow Jones Industrial Average is up 481 points and NASDAQ is up 318 points.
LIVE CATTLE:
Live cattle futures are displaying another very orderly step higher Wednesday morning, continuing the series of higher daily lows that display a clear upward trend on the daily chart. The August contract is up $1.05 at $139.025, the October contract is up $0.90 at $144.075, and the December contract is up $0.775 at $150.425. But this is the kind of simple pattern that is almost too simple, and traders should be expecting some kind of correction eventually, particularly if trading volume picks up during Wednesday afternoon. Things are quiet in the cash cattle trade, too, so far this week. Asking prices are around $138 to $140 on a live basis in the South, but still not fully established in the North.
Wednesday's cattle slaughter is projected at 125,000 head, which is even with week-ago numbers and 9,000 more than year-ago numbers.
Boxed beef prices are lower: choice down $1.29 Wednesday morning ($263.44) and select down $0.88 ($236.82) with a strong movement of 72 total loads (41.54 loads of choice, 24.18 loads of select, 0 loads of trim, and 6.37 loads of ground beef).
FEEDER CATTLE:
Higher feeder cattle futures prices Wednesday have so far displayed a surprising imperviousness to the double-digit gains in corn futures, but some deferred contracts are starting to slip into the red as more of the day's trading volume accumulates. The August contract is up $1.20 at $180, the September contract is up $1.20 at $183.70, and the October contract is up $0.65 at $186.225. The meteorologists are predicting another heatwave across the Plains and Western Corn Belt through the weekend, which, in addition to stressing the calves already in feedlots, will exacerbate the ongoing drought in regions where cow-calf operations have been trimming their herds all summer.
LEAN HOGS:
Nearby hog futures are gaining value at an enthusiastic pace this week as the market evaluates a supply chain that is far from overcrowded with either pork or current hogs. Around midday, the August lean hog contract is up $0.10 at $122.30, the October contract is up $0.80 at $100.40, and the December contract is up $0.05 at $89.65. Year-over-year inflation at the grocery store has priced various pork products anywhere from 4.8 percent higher (pork chops) to 18% higher (lunchmeats) since last July, according to the closely-watched CPI report released Wednesday morning. People have to eat, but demand does seem to be switching to the more economical meat products, like sausage and lunchmeats (and chicken, up 17.6%). Wednesday's hog slaughter is projected at 470,000 head, which is 1,000 more than week-ago numbers but 4,000 fewer than a year ago.
The CME Lean Hog Index from Aug. 8 was 122.25 (up $0.33). Pork cutouts Wednesday morning total 210.73 loads with 195.08 loads of pork cuts and 15.65 loads of trim. Pork cutout values: down $0.05, to $123.80.
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