GENERAL COMMENTS:
The live cattle contracts continue to trade higher and feedlots are hopeful, but unfortunately they know that it's unlikely that they'll see higher cash cattle prices this week as packers have plenty of cattle already committed. Throughout Tuesday's trade, the feeder cattle contracts were able to rally upon the steam that was sending the live cattle market higher, but with corn now trading higher for a second day, the feeder cattle contracts aren't as optimistic. December corn is up 16 1/4 cents per bushel and December soybean meal is up $8.50. The Dow Jones Industrial Average is up 13.58 points and NASDAQ is up 11.93 points.
LIVE CATTLE
Feedlots would love nothing more than to see the cash cattle market gain ground while the board is trending higher, but they know that, with packers sitting on secured supplies, it's going to be a hard mission to accomplish. August live cattle are up $0.07 at $121.82, October live cattle are up $0.25 at $127.42 and December live cattle are up $0.17 at $132.47. Even though boxed beef prices have flirted with the idea of trading higher, it's not likely that the market has found a bottom yet. Thankfully, both domestic and international demand keep the market clipping through supplies and have supported beef products even through their astonishingly high price points. There are just a few bids on the table as the market nears the noon hour in the cash cattle market. Bids of $196 to $197 have been offered in Nebraska, but at this point, feedlots have let them sit idly. More trade is expected to develop either Wednesday afternoon or sometime Thursday.
The Fed Cattle Exchange Auction listed a total of 4,322 head, of which 364 actually sold, 452 were scratched from the auction and 3,506 head were listed as unsold, as they did not meet the reserve prices that ranged from $118 to $122. Opening prices ranged from $117 to $118 (1 lot of Kansas heifers opened at $95), high bids ranged from $117 to $119.50. The state-by-state breakdown looks like this: Texas 3,547 total head, with 364 head sold at $117 to $119.50, 2,926 head unsold and 257 were scratched from the auction; Kansas 649 total head, none sold, 454 head unsold and 195 were scratched from the auction; Oklahoma 126 total head, all of which went unsold.
Boxed beef prices are mixed: choice up $2.45 ($275.79) and select down $3.29 ($253.45) with a movement of 66 loads (37.86 loads of choice, 14.73 loads of select, 6.74 loads of trim and 7.04 loads of ground beef).
FEEDER CATTLE
When Wednesday closes and the July corn contract expires, looking at the board come Thursday will feel like a breath of fresh air as the contracts will likely then all be trading below $6.00 a bushel. Feed prices have been one of the trickiest variables for both cow-calf producers and feedlots to pinpoint as drought conditions have limited resources and led to higher prices. Sadly, even though the live cattle market is rallying into Wednesday's afternoon, the feeder cattle contracts aren't able to soak up any of the market's momentum and move higher alongside the live cattle contracts. The resistance at $160 is still immensely burdensome and unless corn prices endure a sharp fall or cash cattle prices skyrocket higher (which is unlikely), the feeder cattle contracts are expected to continue to dance among the market's pressure and hesitancy. August feeders are down $1.65 at $157.17, September feeders are down $2.05 at $159.55 and October feeders are down $1.95 at $161.70.
LEAN HOGS
Higher cash prices, higher cutouts and a board that's seemed to have found a short-term bottom is allowing for the lean hog complex to enjoy a week of fruitful advancements. August lean hogs are up $0.05 at $105.97, October lean hogs are up $0.87 at $90.25 and December lean hogs are up $0.75 at $83.35. Wednesday's slaughter is anticipated to run at about 467,000 head, which is right in line with the week's lighter tone. With hog supplies being tight, but consumers continuing to clear out the meat coolers, packers are having to walk a fine line of keeping product in the hands of retailers but not oversupplying to the point where they see their profitably ooze away.
The projected CME Lean Hog Index for July 13 is up $0.33 at $111.00 and the actual index for July 12 is up $0.57 at $110.67. Hog prices are higher on the National Direct Morning Hog Report, up $4.05 with a weighted average of $112.86, ranging from $106.00 to $118.00 on 6,6,25 head and five-day rolling average of $109.76. Pork cutouts total 170.67 loads with 152.11 loads of pork cuts and 18.56 loads of trim. Pork cutout values: up $0.43, $119.24.
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