GENERAL COMMENTS:
Both the live cattle and lean hog contracts closed lower Friday afternoon while the feeder cattle complex charged onward, seeming to celebrate the tremendous demand that's currently being seen in the countryside and because of the lower corn prices. Come Monday, both the live cattle and feeder cattle contracts could be pressured as Friday afternoon's Cattle on Feed report showed greater-than-expected placements, which never bodes well for the market regardless of how strong fundamentals are. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $3.26 with a weighted average price of $106.25 on 3,076 head. December corn is down 10 cents per bushel and December soybean meal is down $2.10. The Dow Jones Industrial Average is up 3.30 points.
From Friday to Friday, livestock futures scored the following changes: August live cattle down $0.15, October live cattle down $0.72; August feeder cattle down $0.72, September feeder cattle up $0.05; August lean hogs up $4.47, October lean hogs up $0.65; September corn up $0.21, December corn up $0.23.
LIVE CATTLE:
Trader grew leery of supporting the live cattle contracts ahead of seeing what Friday's Cattle on Feed and Cattle Inventory reports were going to share. The Cattle Inventory report came out as expected as the U.S. beef cow herd is lower than a year ago as well as beef replacement heifers, but the Cattle on Feed report was problematic as placements showed a 3% increase compared to a year ago. Nevertheless, traders pulled their typically move of hitting the sidelines before either report was shared and, come Monday, it's likely that traders will view the COF report as bearish and could trade live cattle lower even though, fundamentally, the market sits in a truly historic position. August live cattle closed $0.30 lower at $180.02, October live cattle closed $0.85 lower at $181.90 and December live cattle closed $0.80 lower at $185.17. A little more cash cattle trade developed throughout the day, but prices kept steady with Thursday's business. This week, Northern trade is mostly being marked at $295, which is $3.50 higher than last week's weighted average, and Southern live cattle are trading mostly at $180, which is $2.00 higher than last week's weighted average.
Friday's slaughter is estimated at 118,000 head, 3,000 head less than a week and year ago. Saturday's slaughter is projected to be around 15,000 head. The week's total slaughter is estimated at 628,000 head, 5,000 head less than a week ago and 35,000 head less than a year ago.
Boxed beef prices closed higher: choice up $0.18 ($302.74) and select up $2.02 ($276.73) with a movement of 103 loads (55.80 loads of choice, 17.93 loads of select, 6.72 loads of trim and 22.96 loads of ground beef). Throughout the week choice cuts averaged $304.07 (down $5.88 from last week) and select cuts averaged $275.95 (down $4.14 from last week) and the week's total movement of cuts, grinds and trim totaled 606 loads.
MONDAY'S CATTLE CALL: Steady. It will be interesting to see exactly how many cattle packers got bought this past week and to see how many of them were committed to the deferred delivery option. Feedlots to scrap for higher prices again next week, but if packers were able to get cattle bought and committed to the deferred delivery option, then feedlots gave them some leverage.
FEEDER CATTLE:
Well, it's a good thing that corn prices continued to trade lower throughout the day, which eased the pressure on feeders and ultimately allowed them to close higher as come Monday morning, feeder will likely be under pressure again. Friday's COF report showed that placements were up 3% compared to a year ago, which is a big pill to swallow given that placements were up 5% last month. Nevertheless, come Monday, feeders will likely trade lower as traders don't like stumbling upon unexpected results. August feeders closed $0.82 higher at $245.92, September feeders closed $0.97 higher at $249.27 and October feeders closed $1.17 higher at $251.00. The Oklahoma Weekly Cattle Auction Summary shared that, compared to last week and throughout the entire state, feeder steers traded $1.00 to $4.00 higher and steer calves traded steady. Feeder heifers and heifer calves sold steady to $3.00 higher. Slaughter cows sold mostly steady to $1.00 higher and slaughter bulls traded $2.00 lower. Feeder cattle supply over 600 pounds was 63%. The CME Feeder Cattle Index for July 20: up $1.13, $238.96.
LEAN HOGS:
The lean hog complex wasn't able to keep its momentum through Friday's close as most of the contracts rounded out the day lower. August lean hogs closed $0.05 higher at $100.67, October lean hogs closed $0.47 lower at $84.25 and December lean hogs closed $0.42 lower at $76.82. And even though pork cutout values closed higher, it was the $18.29 jump in the belly that saved the day as the rib fell $7.33 lower and the ham fell $5.50 lower. Traders will again be pressured on Monday to either take on the resistance at $84.00 or submit to its pressure and simply trade lower again. Pork cutouts totaled 200.21 loads with 170.74 loads of pork cuts and 29.48 loads of trim. Pork cutout values: up $0.15, $115.25.
Friday's slaughter is estimated at 438,000 head, 17,000 head less than a week ago and 4,000 head more than a year ago. Saturday's slaughter is projected to be around 32,000 head. The CME Lean Hog Index for July 19: up $0.30, $103.60.
MONDAY'S HOG CALL: Lower. Packers don't usually show the cash market much interest on Mondays and given that most of the cuts closed lower Friday afternoon, it's unlikely that they'll be too aggressive early next week.
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