GENERAL COMMENTS:
After a rallying first half of the week, the livestock contracts have taken a slower approach to Thursday's market. With the lousy export report for beef, and steady to lower cash prices, it comes as no surprise that the live cattle market has fallen lower. December corn is up 6 cents per bushel and December soybean meal is up $2.80. The Dow Jones Industrial Average is down 414.82 points.
LIVE CATTLE:
The live cattle market is trending lower into Thursday's afternoon as the cash market neglected to help keep the futures market's momentum rolling, and coupled with the lousy export report, it's amounting to a doggish day. Still, the futures market is only trending modestly lower as it comes up against its three-month average high, which is rather impressive given that it is indeed the middle of July. Also boding well for the market is the continued support in boxed beef prices. August live cattle are down $0.85 at $136.00, October live cattle are down $0.72 at $140.55 and December live cattle are down $0.77 at $146.87. There's been some light trade develop throughout the countryside in Nebraska and Colorado at $140, but otherwise the market sits idly. Throughout the week, Southern live cattle have traded for $137 which is nearly steady with last week's weighted average. Northern dressed cattle have sold at mostly $230 which is $2.00 lower than Nebraska's weighted average last week.
Beef net sales of 9,200 mt for 2022, a marketing-year low, were down 17% from the previous week and 35% from the prior four-week average. The three largest buyers were Japan (3,800 mt), Mexico (2,900 mt) and Canada (900 mt).
Boxed beef prices are higher: choice up $0.19 ($268.24) and select up $1.21 ($242.47) with a movement of 53 loads (28.99 loads of choice, 11.77 loads of select, 6.12 loads of trim and 6.31 loads of ground beef).
FEEDER CATTLE:
As outside worries concern the commodity markets, the corn complex is trading mostly higher (up $0.05 to $0.08) as the July contract prepares to expire. After an exhilarating rally earlier in the week, the feeder cattle contracts are trending lower as the market appears to be catching its breath from a technical run. Out in the countryside, feeder cattle demand is showing the honest nature of true price discovery as Western Video Market and Superior Livestock Auctions have hosted stellar sales this week. August feeders are down $0.85 at $179.95, September feeders are down $0.65 at $182.42 and October feeders are down $0.55 at $184.45. From the head and shoulders chart that's appeared in the August contract, textbook logic tells us that the contract could rally up to $190.00, but head and shoulders foundations are roughly 70% to 80% reliable.
LEAN HOGS:
As the August lean hog contract dances around its resistance plane, the market is undecided whether the market will sustain this price point and close steady or if the market's pressures are growing and prices will fall. August lean hogs are down $0.57 at $109.92, October lean hogs are up $0.10 at $93.67 and December lean hogs are steady at $85.32. It's incredibly supportive to see both cash prices and pork cutout values higher again as the week has seen tremendous support throughout the week. As the afternoon rolls around, watching to see how processing speeds fare will be important as both Monday's and Tuesday's speeds were revised lower.
Pork net sales of 18,300 mt for 2022 were down 42% from the previous week and 37% from the prior four-week average. The three largest buyers were Mexico (10,100 mt), Japan (3,400 mt) and China (1,600 mt).
The projected lean hog index for July 13 is up $0.59 at $113.39, and the actual index for July 12 is up $0.24 at $112.80. Hog prices are higher on the Daily Direct Morning Hog report, up $3.09 with a weighted average of $118.67, ranging from $110.50 to $127.00 on 7,063 head and a five-day rolling average of $119.23. Pork cutouts total 136.93 loads with 113.83 loads of pork cuts and 23.09 loads of trim. Pork cutout values: up $2.63, $120.91.
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