GENERAL COMMENTS:
Thursday's trade came and went and there wasn't a whole lot of excitement that rattled throughout the livestock complex. The cash cattle market unfortunately saw cattle trade with time, the feeder cattle contracts rallied amid weaker corn and the lean hog contracts closed mostly higher other than in their nearby contracts. Hog prices closed lower on the National Direct Afternoon Hog Report, down $3.03 with a weighted average of $110.76 on 6,351 head. December corn is down 2 1/2 cents per bushel and December soybean meal is down $7.00. The Dow Jones Industrial Average is up 53.79 points and NASDAQ is down 101.82 points.
LIVE CATTLE:
There's nothing that I love more than a bullish market, but when a bear looks you straight in the eyes, it's not hard to differentiate between the two. Part of the reason why the cash cattle market hasn't been able to stand on solid ground and demand higher prices is because packers don't allow themselves to be pinned in that position. Week in and week out, packers are diligent about securing inventory for the weeks ahead and Thursday's cash cattle trade was nothing short of just that. There were cattle that sold Thursday afternoon for the weeks of Aug. 2 and Aug. 9 -- that's three to four weeks out. It's hard to imagine that the cash cattle market will be able to gain any substantial ground between now and then when packers won't have to fully dive into the market during any given week and won't be incentivized to do so as the boxes will likely continue to fall. There was a light trade that developed in both Kansas and Nebraska for steady prices with the week. So far, Southern live cattle have traded mostly at $119 to $120 (fully steady with last week's trade) and Northern dressed cattle have traded at $197 to $198 (steady as well). Thursday's slaughter is estimated at 119,000 head, 1,000 head less than a week ago and 2,000 head more than a year ago. August live cattle closed $0.12 lower at $121.12, October live cattle closed $0.25 lower at $126.52 and December live cattle closed $0.12 lower at $131.80.
Thursday's actual slaughter data shared that for the week ending July 3, steers averaged 884 pounds (up 1 pound from the week before) and heifers averaged 811 pounds (down 1 pound from the previous week). The week's total cattle slaughter totaled 628,441 head, which remember was a holiday week.
Beef net sales of 9,300 mt reported for 2021 were down 61% from the previous week and 44% from the prior four-week average. The three largest buyers were Japan (3,000 mt), Mexico (1,800 mt) and China (1,600 mt).
Boxed beef prices closed lower: choice down $3.01 ($269.87) and select down $1.27 ($252.48) with a movement of 142 loads (83.73 loads of choice, 27.39 loads of select, 16.91 loads of trim and 13.52 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Friday's trade will likely be at steady prices with the week. For the cash cattle market's sake, hopefully more cattle move before the week's end so showlists don't become problematic.
FEEDER CATTLE:
As the nearby corn contracts closed slightly lower, the feeder cattle contracts weren't pressured and were able to close mostly higher come Thursday afternoon. August feeders closed $0.42 higher at $157.37, September feeders closed steady at $159.22 and October feeders closed $0.02 lower at $161.20. All in all, the feeder cattle market is continuing to chop sideways, not feeling strong enough to surpass the market's clear resistance at $160.00. Unfortunately, without a strong rally being had in the cash cattle market, the feeder cattle contracts are going to have a hard time passing that resistance anytime soon. If corn prices get considerably cheaper, then the market could summon extra support from the corn market's weakness as feeders will be anxious to buy more cattle if feed prices dwindle lower. If not, the market's resistance is firm at $160.00 for the time being. At Mitchell Livestock Auction in Mitchell, South Dakota, compared to last week, a higher undertone was noted on steers up to 850 pounds, steers weighing 850 to 900 pounds sold steady, and steers weighing 1,100 to 1,150 pounds sold $1.00 lower. A higher undertone was noted on heifers up to 800 pounds, and heifers weighing 800 to 950 pounds sold steady to $1.00 stronger. The CME Feeder Cattle Index for July 14: down $0.48, $152.35.
LEAN HOGS:
The lean hog market faced some resistance in its nearby contracts, but the deferred contracts traded fairly confident, not feeling the same pressure as the nearby contracts. The market has been able to trade mostly higher throughout the week as the cash hog market has been highly sought after and the pork cutout value continues to incentivize packers. Packers were aggressive earlier in the week in the cash hog pursuits, but as you can see from Thursday's afternoon report, its pretty safe to say that packers got their buying done earlier this week as the market dropped $3.03 Thursday afternoon. August lean hogs closed $0.80 lower at $104.30, October lean hogs closed $0.17 higher at $89.40 and December lean hogs closed $0.65 higher at $82.80. Pork cutouts totaled 301.07 loads with 286.87 loads of pork cuts and 14.20 loads of trim. Pork cutout values: up $0.83, $119.52. Thursday's slaughter is estimated at 466,000 head, 1,000 head more than a week ago and 5,000 head less than a year ago. The CME Lean Hog Index for July 13: up $0.33, $111.00.
Thursday's actual slaughter data shared that for the week ending July 3, there were 2,272,042 hogs slaughtered. Both dressed and live weights fell by exactly one pounds from the week before as live hogs averaged 281 pounds and dressed hogs averaged 209 pounds.
Pork net sales of 10,600 mt reported for 2021 were down 76% from the previous week and 68% from the prior four-week average. The three largest buyers were Mexico (5,300 mt), Japan (3,100 mt) and Honduras (900 mt).
FRIDAY'S CASH HOG CALL: Lower. Packers were willing to throw some coin at hogs earlier this week to secure necessary supplies, but now that they sit with some built up inventory, they aren't as generous with their prices. Friday's cash hog market will most likely be at a lower price, but more importantly, it will be insightful to watch to see how many hogs trade as that could indicate how aggressive packers will be in the cash market early next week.
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