GENERAL COMMENTS:
Heading into Wednesday's market, everyone's focus is going to be on the cash cattle market as higher prices (substantially higher prices) are expected of the market. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $13.58 with a weighted average of $129.19 on 17,343 head. December corn is down 18 cents per bushel and December soybean meal is down $9.00. The Dow Jones Industrial Average is up 239.57 points.
LIVE CATTLE:
Tuesday's afternoon mandatory reports shared that Nebraska sold some cattle for $152.80 dressed and some live cattle for $146. This was on a light movement, but seeing that type of market aggression on a Tuesday can only mean one thing, packers need cattle! Come Wednesday, the cash cattle market is likely to break out like a gun fight, with packers scrambling to get the cattle they need as market-ready supplies are in short supply. The futures market continues to support the cash cattle market and encourages higher trade. August live cattle closed $1.55 higher at $141.30, October live cattle closed $1.87 higher at $145.67 and December live cattle closed $1.47 higher at $151.20. It's not out of the question that this week could push the cash market to a new high for the year.
Tuesday's slaughter is estimated at 126,000 head, steady with a week ago and 4,000 head more than a year ago. Monday's slaughter was revised to 121,000 head, 3,000 head less than what was originally stated.
Boxed beef prices closed mixed: choice up $0.98 ($265.44) and select down $0.60 ($239.12) with a movement of 161 loads (86.31 loads of choice, 25.77 loads of select, 26.53 loads of trim and 21.91 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Higher. At this point, feedlots sit in the driver's seat of the cash cattle market and will be able to negotiate prices substantially higher this week.
FEEDER CATTLE:
Monday's market may have been a disappointment but thankfully Tuesday's performance made up for the week's lousy start! The higher feeder cattle prices in the countryside amid a weakening corn complex and a rallying live cattle and fat cattle market is a dynamite combination for a well-rounded, well supported feeder cattle market. August feeders closed $1.60 higher at $181.52, September feeders closed $2.47 higher at $185.47 and October feeders closed $2.42 higher at $188.02. With support likely only to get stronger in the live cattle market as more cash cattle trade develops, the feeder cattle market sits in a strong position to continue to rally so long as the corn market doesn't regain support and trade higher. A minimal gain in the corn complex won't likely derail the feeder cattle market but a hefty jump would have to be rationed with. At Tri-State Livestock Auction in McCook, Nebraska, compared to last week, steers sold steady to $11.00 higher and heifers sold $2.00 to $9.00 lower. It is noteworthy to mention that more and more sales are reporting that a smaller portion of their sale receipts are weighing over 600 pounds. Of Tri-State's run of 3,250 head, only 22% of the feeder cattle supply was weighing over 600 pounds. The CME Feeder Cattle Index for Aug. 15: up $0.31, $179.35.
LEAN HOGS:
The lean hog complex fell out of bed come Tuesday as the market closed anywhere from $2.52 to $4.00 lower in its nearby contracts. As the markets ran to new contract highs last week, traders seem uneasy about trading the marking any higher as packers work to manage the cash market and its upward potential by reducing slaughter. Pork cutout values did close lower by Tuesday's end which will likely add to the downward pressure in Wednesday's market. October lean hogs closed $4.00 lower at $96.57, December lean hogs closed $3.15 lower at $87.70 and February lean hogs closed $2.70 lower at $90.25. Pork cutouts totaled 337.41 loads with 313.84 loads of pork cuts and 23.57 loads of trim. Pork cutout values: down $3.76, $121.15. Tuesday's slaughter is estimated at 476,000 head, 2,000 head more than a week ago and 5,000 head more than a year ago. Monday's slaughter was revised to 442,000 head, 14,000 head more than what was originally stated. The CME Lean Hog Index for Aug. 12: down $0.22, $121.71.
WEDNESDAY'S CASH HOG CALL: Steady. Given the big jump in Tuesday's market, it wouldn't be surprising to see prices hold steady come Wednesday. More volume is likely needed by packers, but given the price drop that the futures market endured, packers will try to use that to their advantage to hold the cash market steady.
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