GENERAL COMMENTS:
It was another mixed market for the livestock complex as traders were OK running the lean hog contracts higher, but remained hesitant of overly supporting the cattle contracts. Hog prices closed higher on the Daily Direct Afternoon Hog Report up $0.91 with a weighted average price of $105.73 on 4,685 head. December corn is down 3 cents per bushel and December soybean meal is up $4.50. The Dow Jones Industrial Average is up 26.83 points.
The USDA Cold Storage report shared that total red meat supplies in freezers were down 6% from the previous month and down 14% from last year. Total pounds of beef in freezers were down 3% from the previous month and down 20% from last year. Frozen pork supplies were down 8% from the previous month and down 9% from last year. Stocks of pork bellies were down 14% from last month but up 33% from last year.
LIVE CATTLE:
It was another day of lower closes for the live cattle contracts as traders simply lacked the gusto to push prices higher through Tuesday's market. It's fair that traders are skeptical of supporting the complex ahead of seeing what this week's cash cattle trade amounts to, but Tuesday's Cold Storage report should comfort traders as knowing that frozen beef supplies in freezers is down 20% compared to a year ago means that packers will have to keep a relatively steady kill schedule. Packers are trying to gain power over the cash market by reducing their kill schedule so that they'll need less cash cattle, but with boxed beef prices continuing to show high demand, packers could be pushed into supporting the cash market more than they'd like. August live cattle closed $0.45 lower at $178.30, October live cattle closed $0.70 lower at $179.60 and December live cattle closed $1.02 lower at $183.30. No cash cattle trade developed throughout the day and trade is likely to be delayed until Thursday or Friday again this week.
Tuesday's slaughter is estimated at 125,000 head, 2,000 head less than a week ago and steady with a year ago. Monday's slaughter was revised to 122,000 head.
Boxed beef prices closed higher: choice up $0.06 ($304.22) and select up $0.56 ($277.55) with a movement of 149 loads (91.07 loads of choice, 28.49 loads of select, 9.29 loads of trim and 20.55 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Steady. It's going to be a coin toss again this week in who wins the weekly cash cattle battle: feedlot managers or packers.
FEEDER CATTLE:
Even though the corn complex kept with its lower position throughout Tuesday, the nearby feeder cattle contracts still closed lower. Without the support of a steady to somewhat higher live cattle complex, traders felt vulnerable in Tuesday's market and elected to play it safe as opposed to risking their technical position. The deferred contracts of 2024 had no trouble closing higher, but given the time of year that it is, corn continues to be a wild card that traders know they'll have to dance with again and again until this year's harvest is complete. August feeders closed $0.02 lower at $243.22, September feeders closed $0.27 lower at $246.35 and October feeders closed $0.27 lower at $248.40. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week, feeder steers traded steady to $4.00 lower with most of the decline on steers weighing over 800 pounds. Feeder heifers traded steady to $2.00 lower. Demand was moderate for feeder cattle. Steer calves traded $5.00 to $10.00 lower with the market's biggest losses seen on unweaned or short weaned calves. Heifer calves traded $4.00 to $8.00 lower. It was extremely noticeable in this week's sale that buyers were leery of buying short weaned or unweaned calves amid the sweltering summer temperatures that are in the area. Feeder cattle supply over 600 pounds was 64%. The CME Feeder Cattle Index for July 24: down $0.31, $241.62.
LEAN HOGS:
The lean hog market's behavior was somewhat odd throughout the day and could leave the market with some things to sort out come Wednesday. On the bright side, traders saw the opportunity in futures complex to trade the contracts higher now that corn prices weren't posing as much of a threat. What could hinder Wednesday's ability to keep trading higher is the fact that pork cutout values fell over $4.00 lower Tuesday afternoon. The big $14.38 decline in the belly was largely to blame for the carcass price's weakness, but regardless, a sharply lower cutout close could make traders hesitant on Wednesday. August lean hogs closed $1.55 higher at $101.65, October lean hogs closed $1.72 higher at $84.37 and December lean hogs closed $1.30 higher at $77.00. Pork cutouts totaled 381.57 loads with 336.00 loads of pork cuts and 45.57 loads of trim. Pork cutout values: down $4.15, $113.06. Tuesday's slaughter is estimated at 477,000 head, 17,000 head more than a week ago and 9,000 head more than a year ago. The CME Lean Hog Index for July 21: up $0.54, $104.60.
WEDNESDAY'S HOG CALL: Steady to somewhat higher. Packers will need to buy a sizeable volume of hogs at some point this week, but with pork cutout values being down Tuesday afternoon, they could be hesitant to jump too wildly into Wednesday's market.
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