GENERAL COMMENTS:
Amid much steeper losses in the oilseed and grains sector, livestock futures contracts are also experiencing a mild sell-off to start the week Monday morning. Only nearby lean hogs and feeder cattle futures were sometimes able to trade higher during Monday morning, in the traditional pattern where feed prices go down and feeder cattle prices go up. As feedlot showlists are assembled for the week, cash cattle prices will be benchmarked against last week's prices -- $179 live basis in the South and $294 dressed basis in the North -- although only light volumes traded at those prices. September corn is down 17 3/4 cents per bushel and August soybean meal is down $5.40 per ton. The Dow Jones Industrial Average is down 9.92 points.
LIVE CATTLE:
Live cattle futures slid lower through last week and are starting this week with more sliding. August live cattle are down $1.10 at $177.05, October live cattle are down $1.425 at $178.175 and December live cattle are down $1.20 at $182.40. On the one hand, this dip is consistent with the cash cattle prices that traded roughly $1 lower at the very tail end of last week (late on Friday), but on the other hand, such low volumes of packer business was done last week that it's widely assumed the packers will have to be more aggressive later this week. Feedlot showlists will benchmark against last week's cash cattle prices -- $179 live basis in the South and $294 dressed basis in the North. Monday's slaughter is estimated at 123,000 head, which is 2,000 fewer than a week ago but 1,000 more than a year ago at this time.
Boxed beef prices were higher Monday morning: choice up $0.06 ($302.06) and select up $2.42 ($279.96), with a movement of only 24 loads (15.85 loads of choice, 3.45 loads of select, 0 loads of trim and 4.87 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures contracts were able to take the sharply lower feed grain prices on Monday morning and turn it into an excuse to move higher during the early part of the trading session, but they have since slipped into lower territory too. August feeders are down $1.20 at $244.40, September feeders are down $1.125 at $247.85 and October feeders are down $1.20 at $249.80. A wetter forecast for dry portions of the U.S. Corn Belt during a critical phase of crop development is giving everyone hope that yields might not be too catastrophic this year and the ongoing scarcity in the domestic feed grains market might be mitigated. The relative availability and affordability of feed is a classic motivator for feeder cattle futures traders, and a large volume of futures trade has been noted so far on Monday.
LEAN HOGS:
Movement in lean hog futures contracts has been muted so far Monday and has maintained the mostly sideways character of the deferred months' charts. August lean hogs are up $0.325 at $103.525, October lean hogs are down $0.20 at $84.825 and December lean hogs are down $0.60 at $76.45. Friday's higher jump left a small gap above $102.15 on the August chart, but the lower trade so far Monday hasn't ventured low enough to totally fill that gap yet, so more selling may yet be needed in the afternoon to explore the depth of market orders at that price. Spread trade has been active, showing the diverging outlooks between nearby seasonal hog supply and demand versus the more bearish worries for the market toward the end of the year. Monday's slaughter is projected at 468,000 head, which is 9,000 more than a week ago and 56,000 more than a year ago at this time.
The projected CME Lean Hog Index for July 28 is up $0.19 at $106.00 and the actual index for July 27 was down $0.03 at $105.81. In Monday's Daily Direct Morning Hog Report, negotiated values were up $2.09 to a weighted average price of $101.56, ranging from $90 to $108 on 958 head, and the five-day rolling average is $104.76. Pork cutouts total 119.28 loads with 100.50 loads of pork cuts and 18.78 loads of trim. Pork cutout values: up $6.15 to $119.62.
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