GENERAL COMMENTS:
Higher corn prices were on the forefront of everyone's mind Wednesday and ultimately led to the lower close seen throughout most of the livestock contracts. The cash cattle market remains mostly untested with bids being offered but feedlots continuing to pass on their current price point. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.78 with a weighted average of $96.34 on 11,821 head. December corn is up 31 1/4 cents per bushel and July soybean meal is up $26.40. The Dow Jones Industrial Average is down 102.35 points.
LIVE CATTLE:
Given the sheer pressure that came with the corn market's rally, it's rather impressive that the soon-to-expire June contract and the spot August live cattle contracts were still able to close higher. Traders are feeding on the steadfast nature of feedlots as mangers continue to mostly hold out for better prices. Bids of $182 and $183 live were offered in Nebraska and Iowa, and a dressed bid of $290 was offered in Nebraska, but mostly feedlots let those offers sit idle as they more money. Sure, the futures complex may be somewhat correcting, but the fact is that beef demand is strong and that front-end supplies of market-ready cattle are thin. You may find it contradicting that beef demand is strong when boxed beef prices have been regressing, but the sheer price point that they're trading at is still extremely high. August live cattle closed $0.05 higher at $169.75, October live cattle closed $0.50 lower at $172.95 and December live cattle closed $0.47 lower at $176.92.
Wednesday's slaughter is estimated at 125,000 head, 1,000 head less than a week and year ago.
Boxed beef prices closed lower: choice down $2.66 ($334.25) and select down $3.68 ($304.25) with a movement of 139 loads (80.46 loads of choice, 25.06 loads of select, 16.06 loads of trim and 17.80 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady. Packers are going to use the fact that boxed beef prices are trading lower to their advantage, but feedlots understand that packers are still short bought and need to buy some cattle to keep from needing to aggressively support the market in any upcoming week.
FEEDER CATTLE:
With corn prices nearly jumping over the moon, the feeder cattle complex tucked its head and rolled lower in Wednesday's market as traders didn't stand a chance at offsetting the pressure that came with the $0.29 to $0.31 gain the nearby corn contracts. Yes, the cattle complex remains fundamentally strong, but whenever corn prices jump $0.30 in a day's time, it's hard for the feeder cattle market to do anything besides trade sharply lower. August feeders closed $4.42 lower at $227.72, September feeders closed $4.20 lower at $231.42 and October feeders closed $3.87 lower at $233.90. At Winter Livestock Auction in Dodge City, Kansas, compared to last week, feeder steers weighing 850 to 950 pounds sold steady, but the market's test was thin as there were significantly fewer cattle at this sale than compared to last week's sale. Even though the market's offering was thin, demand was still strong. Slaughter cows sold steady and slaughter bull sold $3.00 to $4.00 lower. The CME Feeder Cattle Index for June 20: down $0.50, $222.18.
LEAN HOGS:
The lean hog complex lost some of its luster ahead of Wednesday's close as the nearby contracts closed lower but the deferred contracts were still able to maintain their higher position through closing. The market's fundamentals shined through the day's end as both cash prices and pork cutout values close higher, but the onset of sharply higher corn prices even began to take its toll on the hod market. July lean hogs closed $1.10 lower at $94.75, August lean hogs closed $0.42 lower at $92.77 and October lean hogs closed $0.55 lower at $81.05. Pork cutouts totaled 248.92 loads with 226.60 loads of pork cuts and 22.32 loads of trim. Pork cutout values: up $1.46, $96.08. Wednesday's slaughter is estimated at 456,000 head - 9,000 head less than a week ago and 13,000 head less than a year ago. The CME Lean Hog Index for June 19: up $0.54, $88.75.
THURSDAY'S HOG CALL: Steady to somewhat lower. The cash hog market saw mild support in the cash complex on Wednesday, just enough to where prices traded slightly higher, but it wasn't by much and it wasn't on a large volume, which leads me to believe that prices could either remain steady or trade potentially lower.
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