GENERAL COMMENTS:
Friendlier outside markets have finally given the livestock futures an opportunity to return to their fundamentally bullish natures, and even lean hogs futures are being pulled higher by the upward cattle trade Friday morning. Significant cash cattle business is still expected to take place later today, with some past prices as a reference price or floor, like last week's $294 dressed trade or the very scattered deals in the North Wednesday and Thursday at $183-$188 live basis. September corn is up 3 3/4 cents per bushel and August soybean meal is down $7.20 per ton. The Dow Jones Industrial Average is up 252 points.
LIVE CATTLE:
Nearby August live cattle futures are leading the gains in the livestock sector Friday morning, as futures traders recognize this financial contract is ultimately going to have to converge with this month's strong prices for fed animals out in the country. August live cattle are up $2.30 at $180.80, October live cattle are up $2.025 at $183.325 and December live cattle are up $1.775 at $187.325. Average prices being paid for Iowa / Minnesota fed cattle on Friday morning are looking like $187.50 live, or $295 dressed, with various classes ranging from $1 to $3 higher than week-ago values. Nebraska is seeing some $189 to $190 price tags. As expected, packers are coming for a higher volume of business than they did during last week's light trade, and we should expect a clearer nationwide picture as the afternoon proceeds. Regardless, it's been a strong reminder of the fundamentally bullish supply-and-demand picture in this market.
Friday's slaughter is estimated at 117,000 head, which is 3,000 fewer than a week ago and 3,000 more than a year ago at this time.
Boxed beef prices were lower Friday morning: choice down $0.13 ($301.88) and select down $1.02 ($277.29), with a movement of 98 loads (50.38 loads of choice, 16.88 loads of select, 24.53 loads of trim and 6.36 loads of ground beef).
FEEDER CATTLE:
Feeder cattle contracts have moved only higher and higher so far Friday and at midday are within reach of test fresh contract highs. The August feeder cattle contract is up $1.65 to $249.60, September feeders are up $2.05 at $253.70 and October feeders are up $2.25 at $255.675. The October contract has briefly managed to exceed its previous contract high of $256, which the market hit amid some streaky trade around the middle of last month. Achieving contract highs amid Friday's more confident volume of futures trade, with all the now-known confirmation of cattle inventories and drought effects, would be a more powerful signal of lasting market strength.
LEAN HOGS:
Pork prices have been volatile from day to day this week, but belly and ham prices have shown some notable strength and the overall cutout seems to be resilient above $110, so there may not be much justification to sell off lean hog futures too steeply just yet. August lean hogs are down $0.45 to $100.55, October lean hogs are up $1.15 at $83.20, and December lean hogs are up $0.70 at $75.25. These gains are obviously not a full correction of Thursday's losses, and unless something drastic happens between now and the close of trade, it's looking like net downward movement for the week. Traditionally, the pork and lean hog markets are relatively sensitive to movement in the U.S. dollar, which affects foreign buyers' price tags and the affordability of pork. A big fall in the U.S. Dollar Index Friday morning is therefore supportive to the gains in lean hog futures. Friday's slaughter is projected at 425,000 head, which is 36,000 fewer than a week ago and 28,000 fewer than a year ago at this time. Saturday is also projected to be a relatively light slaughter -- only 32,000 head instead of 79,000 a week ago or 65,000 a year ago. Extreme heat across the southern United States makes transporting animals and doing just about anything with animals dangerous and difficult at this time.
The projected CME Lean Hog Index for 8/3/2023 is down $0.39 at $105.47 and the actual index for 8/2/2023 was up $0.06 at $105.86. In Friday's Daily Direct Morning Hog Report, negotiated prices came to a weighted average of $100.52. They ranged from $95 to $106 on 1,873 head, and the 5-day rolling average was $103.26. Pork cutouts total 135.55 loads with 121.29 loads of pork cuts and 14.26 loads of trim. Pork cutout values: down $1.62 to $114.01.
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