GENERAL COMMENTS:
Early in the day, the livestock contracts set out to trade higher, but as the afternoon grew long, traders grew leery and ran to the sidelines of the market. The live cattle, lean hog and feeder cattle contracts all closed mostly lower as the markets no longer had technical support to sustain their rallies. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.49 with a weighted average of $113.79 on 8,526 head. December corn is up 18 cents per bushel and December soybean meal is up $10.80. The Dow Jones Industrial Average is up 44.44 points and NASDAQ is down 32.70 points.
LIVE CATTLE:
The live cattle market's excitement fizzled out as the afternoon rolled around and the contracts were no longer able to keep their rally alive. August live cattle closed $0.50 lower at $121.25, October live cattle closed $0.40 lower at $126.77 and December live cattle closed $0.37 lower at $131.92. The live cattle contracts did close lower, but it wasn't because they ran into technical resistance. It seems as though the market simply grew meek after two days of substantial trade and wants to regroup before heading into the latter half of the week. Unfortunately, without there being much cash cattle trade to speak of -- as only 33,750 head have traded thus far this week -- the board can't expect much support from the cash market. There was another light round of trade that developed Wednesday afternoon, as Southern cattle sold live at $119 to $120, and dressed cattle sold anywhere from $197 to $201. There have been rumors spinning that one major plant will be dark at one of their locations next Friday and Saturday, followed by another dark plant the following week. These rumors really aren't that surprising as boxed beef prices continue to wane lower and packers aren't going to be as apt to run snappy processing speeds when they have to give away some of their margin. Wednesday'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.
Boxed beef prices closed lower: choice down $0.46 ($272.88) and select down $2.99 ($253.75) with a movement of 136 loads (84.64 loads of choice, 27.70 loads of select, 14.34 loads of trim and 9.22 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Packers will likely pick up some more cattle come Thursday, but having bought plenty of cattle over the last two weeks could mean that they may be more lackadaisical in this week's purchases.
FEEDER CATTLE:
Early in the day, the feeder cattle contracts only had to face the corn market's modest rally as the contracts traded $0.08 to $0.10 higher, but by closing, the corn contracts had grown stronger and closed anywhere from $0.15 to $0.18 higher. This was somewhat expected as the July contract has officially expired and traders had to position themselves in new contracts, but nevertheless, a higher corn day came at the cost of feeders. August feeders closed $1.87 lower at $156.95, September feeders closed $2.40 lower at $159.22 and October feeders closed $2.42 lower at $161.22. The board's back and forth nature hasn't put any dent on the momentum that's been building throughout the countryside as calf buyers have been rather aggressive in securing their orders. Given that it's the first full week of normal trade after the Fourth of July holiday, the market has seen large runs of calves and they all have been met with moderate to exceptional demand. At OKC West Livestock Auction in El Reno, Oklahoma, compared to last week, feeder steers sold $4.00 to $8.00 higher, and feeder heifers sold $8.00 to $10.00 higher. Steer and heifer calves were too lightly tested to draw an accurate conclusion, but it was noted that calves that had been weaned and had at least one round of shots sold with a higher undertone. The CME Feeder Cattle Index for July 13: not available at this time.
LEAN HOGS:
The lean hog complex ran out of steam as the day concluded but the market still saw follow-through support from packers in the cash hog market, even though pork cutouts slipped ever so slightly. August lean hogs closed $0.82 lower at $105.10, October lean hogs closed $0.15 lower at $89.22 and December lean hogs closed $0.45 lower at $82.15. Given that the market's seen such demand from consumers, Wednesday's weaker close doesn't seem to be a nearby top, but rather an opportunity for the market to catch its breath. Secondly, the market is extremely anxious to see what Thursday's export report unveils as last week China was a big player in the market, but many wonder if they will be again this week. Pork cutouts totaled 270.21 loads with 245.93 loads of pork cuts and 24.29 loads of trim. Pork cutout values: down $0.12, $118.69. Wednesday's slaughter is estimated at 467,000 head, steady with a week ago and 1,000 head less than a year ago. The CME Lean Hog Index for July 12: up $0.57, $110.67.
THURSDAY'S CASH HOG CALL: Steady. Will packers be aggressive again in Thursday's market or have they bought enough hogs in this week's purchases to slide through the later half of the week? It's tough to say as packers are running slower speeds but still want to ensure that they have enough hogs around to keep up with demand and chase these pork cutout values while they still are above $100.00.
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