GENERAL COMMENTS:
Cattle prices are higher and lean hog futures are lower at midday Tuesday, although a look at the charts for pork and nearby lean hogs can certainly still be characterized as bullish. The cash cattle business won't be expected to shape up until later in the week, when prices will be benchmarked against last week's trade -- mostly $179 live basis in the South and $294 dressed basis in the North. Meanwhile, the grain markets have stayed relatively quiet for once. September corn is down 6 cents per bushel and August soybean meal is up $1.60 per ton. The Dow Jones Industrial Average is up 4.89 points.
LIVE CATTLE:
Live cattle futures have been mostly flat Tuesday morning with some bursts of higher trade amid moderate trading volume. August live cattle are up $1.25 at $179.30, October live cattle are up $2.025 at $181.55 and December live cattle are up $2.225 at $185.625. A handful of cash cattle traded in Iowa on Monday at $185, but the market has yet to establish bids and asking prices for the week and won't see significant trade until later days. Boxed beef prices seem to have made their correction off mid-June highs and are now settling into sideways movement above $300 per cwt (for choice). If this stability can continue, it may give packers confidence to approach the cash cattle market with aggressiveness later this week. Tuesday's slaughter is estimated at 125,000 head, which is 1,000 fewer than a week ago and right in line with a year ago at this time.
Boxed beef prices were much higher Tuesday morning: choice up $6.28 ($308.06) and select up $2.02 ($279.75), with a movement of 50 loads (21.08 loads of choice, 17.75 loads of select, 5.10 loads of trim and 6.04 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures are posting enthusiastic gains in the middle of Tuesday's trading session, although the nearby August contract, up $2.925 at $248.525, is still about $3 away from last month's $251.30 contract high. September feeders are up $2.80 at $252.00 and October feeders are up $2.60 at $253.625. Corn condition ratings slipped by a few percentage points in the Monday afternoon Crop Progress report, which isn't too surprising given the dry weather across the middle of the Corn Belt. Meanwhile, nationwide pasture and range conditions dropped even more noticeably in the past week -- now only 39% good to excellent and 29 percent poor to very poor. There are certainly some regions where the grass looks relatively better this year than last year, however, and cow-calf operators are likely considering expansion, to the degree they are able, when the futures market is suggesting feeder calf prices above $250 all the way out to May 2024.
LEAN HOGS:
The trend of strengthening pork prices is supporting the buyers of lean hogs and especially the August lean hog futures contract. Although most contracts are lower at midday, spread trading is keeping that nearby contract relatively stable, down only $0.40 at $103.725. October lean hogs are down $1.175 at $84.825 and December lean hogs are down $0.70 at $76.60. Excessive heat this week in the South is a reminder why this is a challenging season for hog production, and why dressed carcass weights are falling to seasonal lows. The recent slaughter pace shows packers have been economically motivated to keep the lines running, and as a result of going through all these hogs in the past couple of months, the producer side of the market may now find its supply to be very current, which is a powerful market position to be in, and negotiated values keep climbing. Tuesday's slaughter is projected at 470,000 head, which is 1,000 more than a week ago but 2,000 fewer than a year ago at this time.
The projected CME Lean Hog Index for July 31 is down $0.10 at $105.90 and the actual index for July 28 was up $0.19 at $106.00. In Tuesday's Daily Direct Morning Hog Report, negotiated values were up $3.19 to a weighted average price of $104.73, ranging from $90 to $107 on 3,784 head, and the five-day rolling average is $104.88. Pork cutouts total 155.77 loads with 145.43 loads of pork cuts and 10.34 loads of trim. Pork cutout values: down $0.97 to $116.24.
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