GENERAL COMMENTS:
It's been a busy morning for the livestock complex as traders continue to fuel the cattle contracts higher but are skeptical of the hog market since seeing Wednesday's WASDE report. No cash cattle trade has developed at this point and trade will likely be delayed until Thursday at this point. December corn is down 4 3/4 cents per bushel and December soybean meal is up $5.90. The Dow Jones Industrial Average is up 193.16 points.
LIVE CATTLE:
The live cattle market continues to push onward as the market found Wednesday's WASDE report supportive and as feedlots continue to show commitment to holding the cash market as close to steady as possible. August live cattle are up $0.37 at $179.15, October live cattle are up $0.55 at $182.27 and December live cattle are up $0.27 at $185.25. With support from the market's strong fundamentals, traders continue to advance the spot August contract into new territory as it's been embarking at new contract highs over the last two days. The cash cattle market remains quiet, with not a single bid offered yet. As feedlots continue to press on packers and try to keep the market as close to steady as possible during this time of seasonal pressure in the boxes and amid knowing that packers have ample supplies of committed cattle available to them through July, you've got to commend feedlot managers for their commitment to marketing their cattle to the absolute best of their abilities. Asking prices in the South are noted at $180 to $182, but no prices have been listed yet in the North.
Wednesday's WASDE report painted a mostly supportive outlook for the cattle and beef markets through 2023. Beef production for 2023 was increased by 75 million pounds as fed cattle and non-fed cattle slaughter is more aggressive than originally anticipated. For 2024, beef production declined by 25 million pounds as more fed cattle marketings are expected to hit the market in late 2023 than in the first two quarters of 2024. Quarterly steer prices saw significant price increases from last month as the third quarter is now expected to average $178 (up $5.00 from last month) and the fourth quarter is estimated to average $183 (up $9.00 from last month). In 2024, first quarter steers prices are expected to average $186 (up $4.00 from last month) and the second quarter is expected to average $184. Beef imports for 2023 were increased by 20 million pounds, and exports fell by 10 million pounds. Meanwhile, in 2024 both beef imports and exports remained unchanged from a month ago.
Boxed beef prices are mixed: choice down $0.08 ($312.04) and select up $2.08 ($282.32) with a movement of 73 loads (40.84 loads of choice, 14.57 loads of select, 9.99 loads of select and 8.02 loads of ground beef).
FEEDER CATTLE:
With the nearby corn contracts trading $0.04 to $0.12 lower, the feeder cattle complex has stumbled into another day of near perfect trading conditions as the live cattle complex charges into new territory (lending ample support to feeders) and as the slight dip in corn prices alleviates some feed pressure. August feeders are up $1.32 at $248.47, September feeders are up $1.32 at $251.62 and October feeders are up $1.37 at $253.50. Given the two points mentioned above, combined with the stellar demand which continues to keep feeder cattle prices elevated throughout the countryside and on video auctions, it's another strong day in the feeder cattle market and cow-calf producers are tasting the sweet, sweet fruit of their labor.
LEAN HOGS:
The lean hog complex is still chewing over the news from this morning's WASDE report as pork prices are expected to be higher, and export demand continues to look strong, but undoubtedly Prop 12 will affect production. The contracts were all trading higher before Wednesday's WASDE report was released, but since the report's unveiling, traders remain skeptical as there's so much unknown about the hog complex in the months to come. August lean hogs are down $0.55 at $97.02, October lean hogs are up $0.10 at $83.07 and December lean hogs are down $0.42 at $75.95.
The projected CME Lean Hog Index for 7/11/2023 is up $0.70 at $99.36, and the actual index for 7/10/2023 is up $0.51 at $98.66. Hog prices are lower on the Daily Direct Morning Hog Report, down $0.70 with a weighted average price of $102.00, ranging from $90.00 to $102.00 on 1,963 head and a five-day rolling average of $99.85. Pork cutouts total 140.37 loads with 126.55 loads of pork cuts and 13.82 loads of trim. Pork cutout values: down $2.97, $109.02.
Wednesday's WASDE report shared a mixed outlook for the hog and pork markets. 2023 pork production fell by 5 million pounds from last month as slaughter in the second and third quarters of 2023 has been reduced. Pork production in 2024 saw a slight decrease as Prop12 implications are expected to affect the marketplace. The USDA WASDE report stated, "Pork production is reduced as producers indicated intentions to reduce farrowings in the second half of 2023 and lower farrowings are expected to continue in the first half of 2024. However, a more rapid rate of growth in pigs per litter is expected to partly offset the lower farrowings. Nonetheless, smaller-than-previously-expected pig crops in late-2023 and early 2024 will result in a lower pork production forecast." Quarterly price projections for 2023 and 2024 were increased as supplies remain thin. For the third quarter of 2023, barrow and gilt prices are expected to average $63 (up $3.00 from last month), and fourth quarter prices are expected to average $57 (up $2.00 from last month). In 2024, barrows and gilts are expected to average $63.00 in the first quarter (up $3.00 from last month) and the second quarter is expected to average $68.00. For 2023 pork imports were increased by 5 million pounds, and pork exports were increased by 110 million pounds as demand continues to remain strong from China and Mexico especially. For 2024 pork imports are unchanged from last month, but exports for 2024 were increased by 160 million pounds.
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