GENERAL COMMENTS:
It was a long week, but it was a good week for the cattle contracts! With both the live cattle market and feeder cattle market finding support and being able to trade higher throughout most of the week, the complex rallied support that's been absent from the market for quite some time. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.34 with a weighted average of $122.62 on 3,961 head. July corn is up 22 1/4 cents per bushel and July soybean meal is up $11.90. The Dow Jones Industrial Average is down 468.82 points and NASDAQ is down 106.02 points.
From Friday to Friday livestock futures scored the following changes: June live cattle up $2.35, August live cattle up $1.52; August feeder cattle up $3.85, September feeder cattle up $3.70; July lean hogs down $11.30, August lean hogs down $10.30.
LIVE CATTLE:
After closing sharply lower Thursday afternoon, the live cattle contracts regained some of what the market lost in Thursday's trade to round out the week on a positive note. June live cattle closed $0.95 higher at $121.05, August live cattle closed $0.45 higher at $121.55 and October live cattle closed $0.37 higher at $126.95. All in all, this last week was the shot of optimism that the cattle market needed. The board traded mostly higher, cash cattle traded $2.00 to $4.00 higher and even though boxed beef prices veered lower, beef demand is still strong amongst consumers, and packers are processing cattle vigorously as they have thick profits to secure from the meat counter. Throughout the week, dressed cattle sold for $192 to $200, with most of the week's trade averaging $195, which is $4.00 higher than a week ago. Southern live cattle sold for $120 to $124, mostly at $122 which is $2.00 higher than a week ago. The upper end of both the live and dressed cattle prices made new highs for the cash cattle market this year.
Friday's slaughter is estimated at 117,000 head, 2,000 head less than a week ago and steady with a year ago levels. Saturday's kill is projected to be around 69,000 head, 1,000 head less than a week ago and 12,000 head more than a year ago. The week's total estimated slaughter is pinned at 663,000 head, 1,000 head more than a week ago and 17,000 head more than a year ago. We mentioned earlier that slaughter levels throughout the month of June were going to be crucial to the market's long-term success, and thankfully, if these numbers end up being confirmed, the market is achieving a commendable slaughter pace.
Boxed beef prices closed lower: choice down $2.97 ($323.28) and select down $3.63 ($283.61) with a movement of 87 loads (46.17 loads of choice, 23.38 loads of select, 10.03 loads of trim and 7.42 loads of ground beef). Throughout the entire week, choice cuts averaged $329.72 (down $8.61 from last week) and select cuts averaged $292.50 (down $15.26 from last week) and the week's total movement of cuts, grinds and trim totaled 554 loads.
MONDAY'S CASH CATTLE CALL: Steady. With the Senate Ag Committee meeting next week to address the cattle market and its broken structure, I don't foresee packers drawing more attention to themselves by cutting the cash market lower.
FEEDER CATTLE:
The corn market kicked into high gear with Friday's arrival and consequently that sent the feeder cattle contracts trading $1.00 to $2.00 lower. But looking at the entire week from both a technical and fundamental standpoint, the feeder cattle market performed exceptionally well. The market is trading above both the 40-day ($150.85) and 100-day ($153.31) moving averages, and if/when the corn market shows more weakness the market could be ready to rally again. August feeder cattle closed $2.37 lower at $155.02, September feeders closed $1.87 lower at $157.22 and October feeders closed $1.65 lower at $159.05. At Mitchell Livestock Auction in Mitchell, South Dakota, compared to last week, a higher undertone was noted on steers weighing up to 750 pounds. Steers weighing 750 to 1,000 pounds sold $3.00 to $7.00 higher, and a steady undertone was noted on steers weighing over 1,000 pounds. Heifers weighing 650 to 750 pounds sold $2.00 to $7.00 higher, heifers weighing 750 to 950 pounds sold unevenly steady and heifers weighing 950 to 1,000 pounds sold $4.00 higher. The CME Feeder Cattle Index for June 17: not available at this time.
LEAN HOGS:
We knew the lean hog market would find its top at some point; it's evident that this last week was the solidified top for the lean hog rally. July lean hogs closed $2.32 lower at $108.67, August lean hogs closed $0.52 lower at $106.67 and October lean hogs closed $1.17 higher at $88.10. The deferred contracts were able to close higher but that's easier for traders to stomach as both the July and August contracts are still trading upward of $18 to $20 more than the October contract. Nevertheless, the cash hog market remains thin and packers are still making a killing on the market's current meat values, which will most likely continue to incentive a rigorous kill schedule. Pork cutout values really took a beating come Friday afternoon with pork butts being down $21.23 ($175.60) and ribs being down $10.75 ($211.66). Friday's slaughter is estimated at 470,000 head, 13,000 head more than a week ago and 14,000 head more than a year ago. Saturday's kill is projected to be around 60,000 head, 7,000 head more than a week ago and 232,000 head less than a year ago. Pork cutouts totaled 289.89 loads with 260.59 loads of pork cuts and 29.30 loads of trim. Pork cutout values: down $4.18, $121.13. The CME Lean Hog Index for June 16: down $0.92, $121.68.
MONDAY'S CASH HOG CALL: Steady. Monday kills have been hit or miss for the hog market, so its likely that packers are more aggressive later in the week when they see how demand is shaping up and what their labor availability is.
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