GENERAL COMMENTS:
The feeder cattle sector once again closed higher amid a mostly lower trending corn market, while the live cattle complex barely closed higher, seeming to just absorb some of the momentum from the feeder cattle market. Hog prices closed lower on the National Direct Afternoon Hog Report, down $6.60 with a weighted average of $116.18 on 6,746 head. July corn is down 11 cents per bushel and July soybean meal is down $8.40. The Dow Jones Industrial Average is up 322.65 points and NASDAQ is up 97.98 points.
LIVE CATTLE:
The live cattle contracts were hesitant to trade up but eventually came around to the idea and closed almost fully higher. August live cattle closed $0.25 lower at $122.62, October live cattle closed $0.10 higher at $128.27 and December live cattle closed $0.20 higher at $131.70. The market traded painfully slow and the cash cattle market's trade was thin again. There was just a little trade in the North at $197 and live cattle in the South traded for $122. Thus far, dressed cattle have traded $1.00 higher than last week and live cattle have traded mostly steady with last week's trend. The market needs to see more trade develop before the week's end otherwise this week's volume is going to be utterly pathetic. As the market looks to Friday, the afternoon's Cattle on Feed report isn't supposed to unveil any unforeseen surprises. Thursday's slaughter is estimated at 119,000 head, 1,000 head less than a week ago and 1,000 head more than a year ago.
The market wasn't expecting to see significantly lighter carcass weights on Thursday's actual slaughter data report, but a it sure beats the alternative! For the week ending June 12, steers averaged 882 pounds (down 9 pounds from the previous week) and heifers averaged 811 pounds (down 1 pound from the week before). For the week, cattle slaughter totaled 670,297 head. As we've chatted about before, the market desperately needs to see June post aggressive kills throughout the month in order to work through supplies without facing a back-up in inventory thanks to the market's lackadaisical nature that processors ran at earlier this year.
Beef net sales of 16,900 mt reported for 2021 were up 31% from the previous week, but down 3% from the prior four-week average. The three largest buyers were South Korea (6,700 mt), Japan (4,000 mt) and China (1,600 mt).
Boxed beef prices closed mixed: choice down $4.63 ($307.42) and select up $0.73 ($276.14) with a movement of 132 loads (78.45 loads of choice, 25.54 loads of select, 17.67 loads of trim and 9.94 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Given that a small sampling of cattle have traded, prices could be steady with the week's trend. But more important than price at this point in the week is sheer volume. The market needs to see a big movement come Friday.
FEEDER CATTLE:
The corn market ended up closing mixed (showing minimal support for the December 2021 through July 2022 contracts) but the rest of the market closed lower, which in return allowed for feeders to have another rallying day. August feeders closed $1.45 higher at $157.15, September feeders closed $1.12 higher at $159.20 and October feeders closed $1.12 higher at $161.10. The spot August contract is unwilling to push into the resistance at $158.00, but with Wednesday's lower close the market was able to buy itself some time before having to decide what it was going to do. The market's demand amid high hay prices and spreading drought conditions is stellar. Though the sale averages for Northern Livestock Video Auction's Early Summer Special aren't available yet, calves were sought aggressively from buyers. The CME Feeder Cattle Index for June 23: not available at this time.
LEAN HOGS:
The rally is always a lot more fun than the fall, and the lean hog market is enduring quite the fall right now. July lean hogs closed $4.50 lower at $100.02, August lean hogs closed $2.02 lower at $98.70 and October lean hogs closed $0.65 lower at $83.20. The limit loss seen in the July contract comes as traders are moving to the August contract, and there was a lot of skepticism ahead of Thursday afternoon's hogs and pigs report. Most are interpreting the report with great caution as the market has been anything but simple and straight forward in the last year. I understand that it's maddening to see the market's pork cutout value up over $5.00 Thursday afternoon as the market just endured the blows Tuesday's $12.93 loss. But that, my friends, is the definition of a volatile market -- a volatile market trying to find footing and unsuccessfully doing so. Pork cutouts totaled 336.90 loads with 307.61 loads of pork cuts and 29.29 loads of trim. Pork cutout values: up $5.17, $112.99. Thursday's slaughter is estimated at 473,000 head, 5,000 head less than a week ago and 4,000 head more than a year ago. The CME Lean Hog Index for June 22: down $1.14, $119.59.
Thursday's actual slaughter data shared lighter weights, for the week ending June 12, for both live and dressed hog carcass weights. Live carcasses averaged 286 pounds (down 3 pounds from the previous week) and dressed weights averaged 213 pounds (down 2 pounds from the previous week).
Pork net sales of 28,600 mt reported for 2021 were down 2% from the previous week and 4% from the prior four-week average. The three largest buyers were Mexico (11,500 mt), Canada (5,200 mt) and Japan (3,200 mt).
FRIDAY'S CASH HOG CALL: Lower. Packers will most likely coast into the weekend, having secured inventory earlier in the week, and will pick up business next week as the market continues to search for answers.
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