GENERAL COMMENTS:
The livestock contracts rounded out the day mixed as the feeder cattle contracts closed lower with corn prices trading higher, the live cattle market closed on both sides of steady, and the hog market closed anywhere from $1.00 to $3.00 higher. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.59 with a weighted average of $120.23 on 8,140 head. July corn is up 3 1/2 cents per bushel and July soybean meal is up $5.90. The Dow Jones Industrial Average is up 823.32 points.
From Friday to Friday, livestock futures scored the following changes: June live cattle down $2.68, August live cattle down $3.20; August feeder cattle down $0.45, September feeder cattle up $0.28; July lean hogs down $0.08, August lean hogs down $1.10; July corn down $0.34, and September corn down $0.55.
LIVE CATTLE:
The live cattle market endured severe push back from traders this past week even though the cash cattle market showed promise of good packer demand. Friday's closing USDA reports shared that roughly 81,000 head of cattle have traded this week. Monday's report will disclose exactly how many cattle traded and how many cattle packers got bought with time, but the question that's on everyone's mind is: Did packers get enough cattle bought to where they won't have to support the spot market next week? Time will tell, but with processing speeds consistently killing more than 650,000 head per week, packers are burning through their inventories. In the South, cattle traded for mostly $138, which is roughly steady for Texas but $1.00 lower for Kansas when compared to the week before. However, Northern feedlots weren't willing to take the market's early weaker bids and it paid dividends. Throughout the North, prices ranged anywhere from $230 to $240 but traded mostly at $234 dressed, which is $4.00 higher than a week ago, and live prices in the North traded mostly at $150, but some $151 trade was reported. June live cattle closed $0.10 higher at $135.35, August live cattle closed $0.50 lower at $133.37 and October live cattle closed $0.25 lower at $139.75.
Friday's Cattle on Feed report shared that June 1 on feed inventories totaled 11,846,000 head, up 1% from a year ago. Pieces of the report passed the sniff test, such as the higher marketings and lower placements. However, where I struggle with the report is: How can Nebraska have record on-feed numbers, but the cash market be so current that there's a $12 premium in this week's market because supplies of market-ready cattle in the North are so thin? And, how can May's disappearances be 13% higher than a year ago and total 76,000 head? (The extreme heat wave that killed cattle in Kansas was in June, not May.)
Friday's slaughter is estimated at 122,000 head, 2,000 head less than a week ago and 5,000 head more than a year ago. Saturday's slaughter is projected is projected to be around 46,000 head. This week's slaughter is estimated at 666,000 head, 1,000 head less than a week ago but 6,000 head more than a year ago.
Boxed beef prices closed higher: choice up $0.32 ($264.98) and select up $0.08 ($245.02) with a movement of 85 loads (46.30 loads of choice, 17.21 loads of select, 10.61 loads of trim and 10.88 loads of ground beef). Throughout eh week choice cuts averaged $266.06 (down $2.27 from last week) and select cuts averaged $245.81 (down $0.57 from last week) with a total movement of cuts, grinds and trim totaling 595 loads.
MONDAY'S CASH CATTLE CALL: Steady. Much of next week's cash cattle market will depend on how many cattle packers got bought this week. Supplies are more ample in the South, and if fuel wasn't so expensive, packers would just truck cattle North where supplies are incredibly thin, but with fuel being as high as it is that isn't an option.
FEEDER CATTLE:
As the corn market closed $0.03 to $0.18 higher, the feeder cattle market tucked its tail throughout Friday's market and closed lower. August feeders closed $2.35 lower at $172.50, September feeders closed $1.77 lower at $175.07 and October feeders closed $1.55 lower at $177.07. The feeder cattle market has found comfort trading sideways between the 40-day and 100-day moving averages. Much of next week's market will depend on how the corn market trades as cattle buyers have been aggressive and ready to buy, so any hint of weaker inputs will just help the market's cause. The CME Feeder Cattle Index for June 23: down $1.52, $163.71.
LEAN HOGS:
The lean hog market somewhat redeemed itself throughout Friday's market as the contracts were able to close anywhere from $1.00 to $3.00 higher ahead of the weekend. July lean hogs closed $2.37 higher at $110.92, August lean hogs closed $3.10 higher at $106.77 and October lean hogs closed $2.07 higher at $92.32. Earlier in the week, when the market came up to resistance at $110, there wasn't enough support to hold the market or push higher. so consequently prices crashed lower. However, now that the market is away from its closest resistance plane, there's some room for the contract to trade higher before it again must come up against the $110 point. Next week will be a big one for the lean hog market as the industry is anxiously awaiting to see what the June 29 Quarterly Hogs and Pigs report will unveil; it's undoubtedly expected to shape the nearby market and potentially deferred market too. Pork cutouts total 262.83 loads with 234.06 loads of pork cuts and 28.77 loads of trim. Pork cutout value: up $2.43, $112.20. Friday's slaughter is estimated at 433,000 head, 25,000 head less than a week ago and 10,000 head less than a year ago. Saturday's slaughter is projected to be around 20,000 head. The CME Lean Hog Index for June 22: down $0.05, $110.69.
MONDAY'S CASH HOG CALL: Steady to somewhat lower. Given that packers were aggressive buyers late this week, it's likely that they let Monday pass them buy, which will give them time to calculate their needs before addressing the cash market.
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