GENERAL COMMENTS:
Wednesday's market was a lot more fruitful than Tuesday, as the cattle contracts closed higher and the lean hog market kept its vibrant rally. The lean hog market saw tremendous support of its cash market, which helped fuel the contracts drive to keep trading higher. Come Thursday, all eyes will be on the cash cattle market as there's been very few cattle trade thus far. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $3.28 with a weighted average of $123.74 on 28,776 head. December corn is up 6 1/2 cents per bushel and December soybean meal is up $1.90. The Dow Jones Industrial Average is up 69.86 points.
LIVE CATTLE:
Thursday's market will have everyone on their toes as there's a battle going on between packers and feedlots this week. It's so refreshing to see feedlots realizing the leverage they possess and being unwilling to sell cattle early in the week for steady/lower prices. Instead, feedlots are looking at the board's green close, noting their manageable showlists and seem willing to make packers sweat a little bit. There's been a few cattle trade live for $148 to $150 (some of which aren't committed until the week of July 25) but largely the market sits untested and undeveloped. August live cattle closed $1.57 higher at $134.50, October live cattle closed $1.47 higher at $139.95 and December live cattle closed $1.30 higher at $145.35. Helping turn the market's tone slightly higher is also that boxed beef prices are trending slightly higher as retailors stock up on supplies after the Fourth of July.
Wednesday's slaughter is estimated at 126,000 head, 2,000 head more than a week ago and 5,000 head more than a year ago.
Boxed beef prices closed higher: choice up $3.39 ($268.05) and select up $3.06 ($242.93) with a movement of 121 loads (65.64 loads of choice, 32.71 loads of select, 8.14 loads of trim and 14.94 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. Given that feedlots haven't sold cattle yet bodes well for sellers. Packers will likely get more aggressive in Thursday's trade and prices could run higher.
FEEDER CATTLE:
By the day's end, the corn market had taken its lower approach to Wednesday's market and pulled off a slightly higher close. However, even as the corn market was able to close $0.02 to $0.08 higher, the feeder cattle contracts rounded out the higher with substantially higher closes in the market's deferred contracts. August feeders closed $0.60 higher at $173.30, September feeders closed $0.97 higher at $177.07 and October feeders closed $1.40 higher at $180.37. Looking at the market, the writing is all over the marketplace that supplies of feeder cattle are going to be thin later this year and into 2023. As the deferred feeder cattle contracts of 2022 all print at $182.00 or better, feedlots are expecting that the live cattle market will see better prices in the spring of 2023 and look to capitalize on that market when the time comes. Until then, buying calves/feeders at the right prices will be the tricky part combined with finding affordable feed. At Winter Livestock in Dodge City, Kansas, compared to two weeks ago, steer sand heifers weighing 400 to 900 pounds traded $4.00 to $7.00 higher on light receipts. The sale also noted that they were able to sell 100 fresh calves from the side of cows weighing under 300 pounds for $450 to $550 per head. Slaughter cows traded $3.00 to $6.00 lower and slaughter bulls traded $7.00 to $8.00 lower. The CME Feeder Cattle Index for July 5: up $0.11, $165.08.
LEAN HOGS:
The lean hog complex had nothing short of a wild Wednesday, as the market gapped higher in the August contract closing $3.25 higher, and the cash hog market traded 28,776 head at $3.28 higher than Tuesday. As everyone jump back into the swing of things after the crazy holiday rush, retailers and packers alike are scrambling to get the hogs/product they need to meet demand. Yes, pork cutout values did close slightly lower, but given the rest of the market's strength, it didn't hinder the market's momentum. July lean hogs closed $1.00 higher at $113.15, August lean hogs closed $3.25 higher at $109.20 and October lean hogs closed $2.82 higher at $92.22. Pork cutouts totaled 295.61 loads with 261.91 loads of pork cuts and 33.70 loads of trim. Pork cutout values: down $2.98, $111.50. Wednesday's slaughter is estimated at 476,000 head, 10,000 head more than a week ago and 15,0000 head more than a year ago. Tuesday's hog slaughter was revised to 453,000 head, 5,000 head less than what was originally stated. The CME Lean Hog Index for July 4: down $0.12, $110.58.
THURSDAY'S CASH HOG CALL: Steady. Packers are short bought and even though Thursday's movement was huge, it's likely not everyone got all their needs met Wednesday and will have to do some clean-up business some Thursday.
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