GENERAL COMMENTS:
It was another strong day for the livestock complex as the marketplace closed higher with fundamental support giving traders the confidence needed to push prices higher. The big storm that's swept across the livestock market, though, has been the feeder cattle market's performance this week. Whether you're evaluating the market from a technical standpoint or viewing its sales in the countryside this week, prices have launched higher and are demanding everyone's full attention. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.02 with a weighted average of $122.42. December corn is up 8 3/4 cents per bushel and December soybean meal is up $12.80. The Dow Jones Industrial Average is down 208.54 points.
LIVE CATTLE:
The live cattle market had another green trending day, pulling off a higher close by Wednesday's end, even though boxed beef prices closed lower and cash cattle traded steady to $1.00 to $2.00 lower. August live cattle closed $0.20 higher at $136.87, October live cattle closed steady at $141.27 and December live cattle closed $0.45 higher at $147.65. The powerhouse play of the livestock complex has been the feeder cattle market and its unwavering rally as buyers flock to sales and continue to waive their hand until their orders get filled. The electrifying energy that's propelled the feeder cattle market higher has helped push the live cattle market close to its three-month average high of $137.50. If processing speeds continue to run aggressively and demand shows no sign of weakness, the live cattle market could break higher and completely shake the seasonal trend of lower trade in the dog days of summer. A light trade developed throughout Wednesday's market as Southern live cattle traded at $137, which is steady with last week's market, and Northern dressed cattle traded $230 which is $2.00 lower than last week.
Wednesday's slaughter is estimated at 126,000 head, steady with a week ago and 7,000 head more than a year ago.
Boxed beef prices closed lower: choice down $0.46 ($268.05) and select down $0.91 ($241.26) with a movement of 119 loads (66.74 loads of choice, 27.75 loads of select, 8.70 loads of trim and 15.78 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. I wish that the cash cattle market could see some upside this week, but as packers have so cleverly padded themselves with committed cattle for this week, it's unlikely that the market's trade gets much better.
FEEDER CATTLE:
The feeder cattle complex kept with its upward rally throughout Wednesday's market, despite fat cattle selling steady to $1.00 to $2.00 lower, and despite the corn market closing with a $0.06 to $0.09 gain in the nearby contracts. The feeder cattle market has been wild this past week as, throughout the entire nation, feeder cattle sales are on fire as buyers are crowding sales and willing to drop some serious coin in order to get the cattle they need bought. Even though we've known for the last six to eight months that there were going to be fewer feeder cattle in this fall and winter marketing season, buyers have come to same conclusion and are buying relentlessly. Technically speaking, the spot August feeder cattle contract has broken out of all of its recent trading ranges and is searching for a high. As the market runs well above the 100-day and 40-day moving averages, continued fundamental support is imperative as traders are running into new territory. August feeders closed $1.22 higher at $180.80, September feeders closed $1.55 higher at $183.07 and October feeders closed $1.55 higher at $185.00. At Winter Livestock Auction in Dodge City, Kansas, compared to last week, feeder steers weighing 450 pounds to 950 pounds traded $3.00 to $10.00 higher. Feeder heifers weighing 450 to 900 pounds sold $3.00 to $10.00 higher. Slaughter cows traded $8.00 lower and slaughter bulls traded $6.00 to $7.00 lower. The CME Feeder Cattle Index for July 12: up $0.96, $172.30.
LEAN HOGS:
The feeder cattle market has consumed the livestock market's attention, but the gains that the lean hog market has achieved is substantial this week. The resistance at $110.00 has been a struggle for the spot August lean hog contract, but with Wednesday's higher close, the market pushed above resistance. Helping reassure traders that the market's resistance could indeed be taken on was the higher close in pork cutout values and the continued support of the cash hog market. Even though cash prices closed lower, a $0.02 decrease following Tuesday's advancement of $5.19 higher isn't much of a drop. The futures market did gap higher in Wednesday's market, and so the complex will be pressured in the later half of the week to either sustain these levels of bow down and trade back below $110. Slaughter speeds have been problematic this week and again Tuesday's slaughter was revised lower following the revision of a slower Monday. August lean hogs closed $1.50 higher at $110.50, October lean hogs closed $0.95 higher at $93.55 and December lean hogs closed $0.70 higher at $85.37. Pork cutouts total 232.45 loads with 218.81 loads of pork cuts and 13.64 loads of trim. Pork cutout values: up $0.81, $118.28. Wednesday's slaughter is estimated at 454,000 head, 22,000 head less than a week ago and 11,000 head less than a year ago. Tuesday's slaughter was revised to 451,000 head, 9,000 head less than what was originally stated. The CME Lean Hog Index for July 11: up $0.80, $112.57.
THURSDAY'S CASH HOG CALL: Steady. Given that prices didn't fall much in Wednesday's market, Thursday could trend steady to slightly lower as packers still need to secure some numbers.
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