GENERAL COMMENTS:
Wednesday's market ended up treating both the lean hog and feeder cattle contracts favorably, and even though the spot and nearby contract in the live cattle complex closed lower, the rest of the market trended higher as a bullish outlook is on the horizon thanks to a smaller cow herd. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $5.70 with a weighted average of $130.45 on 31,317 head. December corn is up 2 1/4 cents per bushel and December soybean meal is up $8.30. The Dow Jones Industrial Average is up 436.05 points.
LIVE CATTLE:
With open interest now at the lowest point it's been since 2016, the live cattle market's environment is changing as a bullish future is on the horizon and everyone can see it. The August and October 2022 contracts rounded out the day lower as weaker cash prices feel like another expected, but stinging kick to the chops while packers strategically continue to work the cash market lower. The deferred contracts continue to realize the optimism that lies in the later 2022 and 2023 contracts and had no problem closing higher amid the day's slight pressure of a weak cash market and lower boxed beef prices. August live cattle closed $0.07 lower at $136.80, October live cattle closed $0.05 lower at $142.32 and December live cattle closed $0.12 higher at $148.17. Southern deals continue to trade at $135, which is $1.00 lower than last week's weighted average, and Northern deals are developing at $225, which is $2.00 lower than last week's weighted average.
Wednesday's slaughter is estimated at 125,000 head, 1,000 head more than a week ago and 5,000 head more than a year ago.
Boxed beef prices closed lower: choice down $1.12 ($267.99) and select down $2.07 ($241.81) with a movement of 146 loads (88.45 loads of choice, 28.91 loads of select, 9.46 loads of trim and 18.92 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Given that cattle have traded in both regions, and that packers possess the largest portion of leverage right now in the market, it's unlikely that prices get any stronger come Thursday.
FEEDER CATTLE:
The feeder cattle complex looked at the corn market's mild $0.02 to $0.03 rally that it pushed throughout the day, and with a shrug of shoulder and without a care in the world, the market opted to take charge and traded higher. With sound fundamental support from continued buying in the countryside, the feeder cattle market felt comfortable trading higher and pushed all its nearby contracts well over a $1.00 higher before the day's end. August feeder cattle closed $1.67 higher at $179.10, September feeders closed $1.42 higher at $181.85 and October feeders closed $1.25 higher at $184.47. At OKC West Livestock Auction in El Reno, Oklahoma, compared to last week, feeder steers traded $3.00 to $7.00 higher and feeder heifers traded steady to $2.00 higher. Steer and heifer calves sold $5.00 to $10.00 higher. The CME Feeder Cattle Index for July 26: up $0.73, $170.64.
LEAN HOGS:
Cash prices rounded out the day substantially higher and on a big movement, the futures market charged higher through Wednesday's close and pork cutout values closed higher by the skin on their teeth. The recent norm of strong cash hog trade two days out of the week has become a standard that the market is seeming to expect as supplies of market-ready hogs remains thin and favor seller's position. Thankfully, the cash hog rally helped propel the futures market higher after trading lower earlier this week, and even though pork cutout values didn't do enough good to amount to anything, a higher close is a higher close. August lean hogs closed $1.62 higher at $118.60, October lean hogs closed $2.80 higher at $96.45 and December lean hogs closed $1.40 higher at $87.37. Pork cutouts total 218.41 loads with 204.63 loads of pork cuts and 13.77 loads of trim. Pork cutout values: up $0.02, $126.79. Wednesday's slaughter is estimated at 468,000 head, up 9,000 head from a week ago and up 1,000 head from a year ago. The CME Lean Hog Index for July 25: up $0.35, $119.48.
THURSDAY'S CASH HOG CALL: Steady to somewhat lower. Given that today's trade of hogs was big, Thursday's business could be anything. Trade could be strong again on Thursday as production speeds have maintained a swift pace this week. Then again, packers may be more reluctant to chase the cash hog market on Thursday after Wednesday's big bite.
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