GENERAL COMMENTS:
It was a dynamite day for the feeder cattle market, as the corn complex came tumbling lower, and demand for feeder cattle is showing no sign of slowing. Heading into Wednesday's trade, feedlots are hopeful this type of energy and excitement helps them push the cash cattle market $1 higher. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $5.19 with a weighted average of $122.44 on 27,258 head. December corn is down 42 1/2 cents per bushel, and December soybean meal is down $11.20. The Dow Jones Industrial Average is down 192.51 points.
LIVE CATTLE:
As the feeder cattle market soared higher thanks to a weakening corn market and amazing demand throughout the countryside, the live cattle market rallied on its shirttails and closed slightly higher too. August feeders closed $0.52 higher at $136.67, October live cattle closed $0.85 higher at $141.27, and December live cattle closed $0.70 higher at $147.20. Add the futures market's bullish tone to the fact that processing speeds are running rapidly and that boxed beef prices are still seeing strong support amid it being the middle of July, and you've got yourself one heck of a case for a bull market. It will be interesting to see how the cash cattle market trades later this week as, yes, there are numerous supportive factors in the cattle market today, but that doesn't erase the fact that packers still have cattle pre-bought and committed for this time. Nevertheless, asking prices in the South are noted at $139 to $140, and asking prices in the North are still illusive.
Tuesday's slaughter is estimated at 126,000 head -- steady with a week ago but 7,000 head more than a year ago.
Tuesday's WASDE report shared supportive news for the cattle and beef markets. Beef production is raised for the second half with lower expected carcass weights and lower third-quarter slaughter more than offset by higher fourth-quarter slaughter. Beef production in 2022 grew by 15 million pounds from June's report to total 27,922,000 pounds. The beef production forecast was lowered slightly in anticipation of lighter carcass weights in 2023, but the industry will know more next month, as by then, it will have seen USDA's July Cattle Inventory Report, which will be released July 22. Beef production in 2023 is anticipated to total 25,940,000 pounds. Quarterly prices didn't change much for 2022, other than in the second and third quarters where gains were noted. The second quarter's average price jumped $1.93 from last month to average $141.93, and the third quarter's average price jumped to $139.00, $3 higher than June's report. Beef import forecasts for 2022 and 2023 are unchanged from last month, while the export forecasts are raised for both years on firm international demand. Beef exports for 2022 grew by 75 million pounds, and beef exports for 2023 grew by 40 million pounds.
Boxed beef prices closed mixed: choice up $0.37 ($268.51) and select down $0.83 ($242.17) with a movement of 178 loads (79.06 loads of choice, 53.72 loads of select, 10.66 loads of trim and 34.32 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. Feedlots could get the market to trade $1 higher if packers need cattle bad enough, but with packers having cattle committed for this time, it's a coin toss on whether or not they'll have to chase the cash market enough to actually see prices trade higher.
FEEDER CATTLE:
Now that's a hot market! Wow! By looking at the charts and seeing the level feeder cattle were demanding at sales on Monday, one could believe that the feeder cattle market could trade higher. But Tuesday's market stormed through the day's trade like a bull in China shop. The grain market played right into the feeder cattle market's favor, as the drop in crude oil prices sent the corn market scrambling and then kept prices depressed after seeing the day's WASDE report. August feeders closed $4.70 higher at $179.57, September feeders closed $4.12 higher at $181.52 and October feeders closed $3.57 higher at $183.45. With both Western Video Market and Superior Livestock Auctions hosting sales this week where close to 250,000 head of cattle will trade, this week's vibrant energy is already being noted in those sales and will likely trickle into the Northern Livestock Auctions sale next week. At Sioux Falls Regional Cattle Auction in Worthing, South Dakota, compared to two weeks ago, feeder steers under 700 pounds sold with higher undertones, steers weighing 700 to 750 pounds traded steady to $1 lower and those over 750 pounds traded steady to $5 higher. Feeder heifers traded steady to $3 higher, heifers weighing 850 to 900 pounds sold $6 to $8 higher. The CME feeder cattle index 7/11/2022: down $0.87, $171.34.
LEAN HOGS:
The nearby lean hog contracts were able to keep the market elevated through closing even though the feeder cattle market stole most of the livestock complex's attention for the day. August feeders closed $0.62 higher at $109, October feeders closed $0.15 higher at $92.60, and December lean hogs closed $0.02 higher at $84.67. The market relied on its fundamental support to keep its nearby contracts higher, and thankfully, both cash and pork cutout prices prevailed through closing. Pork cutouts total 290.43 loads with 269.00 loads of pork cuts and 21.43 loads of trim. Pork cutout values: up $2.40, $117.47. Tuesday's slaughter is estimated at 460,000 head -- 7,000 head more than a week ago and 8,000 head less than a year ago. Monday's slaughter was revised to 439,000 head -- 6,000 head less than what was originally stated. The CME lean hog index 7/8/2022: up $0.80, $111.77.
Tuesday's WASDE report comes as a mixed bag for the hog market. Pork production is lowered on a slower-than-expected pace of slaughter in June and lower expected second-half carcass weights. Pork production in 2022 fell by 60 million pounds from June's forecast to 27,159,000 pounds. Pork production is raised based on 2022 second-half farrowing intentions reported in USDA's Quarterly Hogs and Pigs report and expectations that farrowings in the first half of 2023 will be modestly higher. Pork production in 2023 grew by 155 million pounds from last month to 27,365,000 pounds. The second quarter is the only quarter in 2022 that changed from June's report, and it grew by $0.58 to average $75.58. Pork import forecasts are raised for both 2022 and 2023 on the current pace of trade and firm U.S. demand. Pork imports in 2022 grew by 110 million pounds from a month ago, and 2023 pork imports grew by 185 million pounds.
WEDNESDAY'S CASH HOG CALL: Steady to somewhat lower. Market-ready supplies of hogs are thin right now, which is helping hog producers demand more money in the spot cash market. But with a $5 advancement in Tuesday's cash market, prices could hold steady if packers didn't fulfill all their order needs. But they could trend lower, too, as that's a significant single-day increase.
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