GENERAL COMMENTS:
The livestock complex closed mostly lower as all three markets felt immense nearby pressure and were reminded of the uphill battle that the market will most likely endure through potentially the rest of the year. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.63 with a weighted average of $31.08 on 9,356 head. December corn is down 2 3/4 cents per bushel and December soybean meal is up $0.60. The Dow Jones Industrial Average is up 556.79 points and NASDAQ is up 97.74 points.
LIVE CATTLE:
It was disappointing for the South to sell cattle this week for steady prices as most thought that, for sure, the market would be able to pull at least $1.00 more out of packers. But just as there are two sides to every coin, there is usually a rhyme behind the reason, and with temperatures continuing to be scorching hot in the Southern Plains, feedlots simply want gone of what they have. August live cattle closed $0.85 lower at $98.80, October live cattle closed $1.10 lower at $103.10 and December live cattle closed $1.22 lower at $107.15. The board closed lower knowing that the next five months are going to be a long road ahead. The industry would love nothing more than to shove the problem of the backlogged cattle behind us and to move on to better days and stronger prices, but Tuesday's close humbly reminded us all that problems of this size cannot be swept under the rug and have an odd way of resurfacing. Tuesday's slaughter is estimated at 119,000 head, steady with a week ago and 3,000 head less than a year ago.
*Monday's cattle slaughter was revised to 115,000 head.
Choice cuts fell another $2.34 Tuesday afternoon, closing only a mere $0.92 above $200. As the third quarter is historically the hardest boxed beef selling stretch, one begins to wonder how much lower prices will fall with a considerable amount of time before Labor Day weekend. In October of 2018, choice prices flirted with the $200 threshold, but it was in December 2017 when choice prices last broke below $200 -- on December 17, 2017, choice cuts closed at $199.56.
Boxed beef prices closed lower: choice down $2.34 ($200.92) and select down $1.03 ($190.85) with a movement of 147 loads (69.36 loads of choice, 35.10 loads of select, 14.62 loads of trim and 28.32 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. The North has yet to sell cattle this week, which is odd for the last couple of week's trend. As of late, there's been a little trade here and there every day, but cattle didn't trade Monday and just a handful of cattle traded in the South Tuesday afternoon.
FEEDER CATTLE:
Feeder cattle contracts continued with the earlier regression and closed lower throughout the complex. August feeder cattle closed $0.32 lower at $136.72, September feeders closed $0.60 lower at $137.47 and October feeders closed $0.82 lower at $138.70. Best put, the market wants opportunity -- it yearns for better days and catches glimpses of hope with how stronger feeder cattle sales have been, but with the hard-underlying fundamentals that plea for the market to trade lower, the back and forth tug-of-war is real. At OKC West Livestock Auction, in El Reno, Oklahoma, compared to last week, steer and heifer calves sold steady to $2.00 stronger. Thankfully demand was strong again this week as this past weekend's rain aided pastures and helped relieve some stress on producer. The CME feeder cattle index 7/13/2020: up $0.45, $135.62.
LEAN HOGS:
Lean hog contracts were the only livestock market able to close somewhat higher through Tuesday's close. August lean hogs closed $1.35 lower at $49.92, October lean hogs closed $0.67 lower at $49.67 and December lean hogs closed $0.65 lower at $51.22. Like the cattle complex, the lean hog complex remains extremely thin in trader interest, so price swings are subject to ripple through the market. Thankfully, over the last two days, the cash market has been stronger, which has gingerly aided in influencing the contracts to trade higher. Pork cutouts total 466.72 loads with 434.10 loads of pork cuts and 32.63 loads of trim. Pork cutout values: down $1.28, $66.24. Tuesday's slaughter is estimated at 475,000 head - 6,000 head more than a week ago and 2,000 head more than a year ago. The CME lean hog index 7/10/2020: up $0.29, $45.62.
*Monday's hog slaughter was revised to 448,000 head.
WEDNESDAY'S CASH HOG CALL: Steady to modestly lower. As the cash hog market has closed stronger over the last two days, it wouldn't be surprising to see packers step back ever so slightly.
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