GENERAL COMMENTS:
Tuesday was a mixed day for the livestock complex as both the lean hog and feeder cattle contracts closed lower while the live cattle complex ran to new contract highs in several of its nearby contracts. No cash cattle trade has developed yet, and packers and feedlots are expected to wait until late in the week again this week to trade cattle. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $2.25 with a weighted average price of $104.25 on 14,745 head. December corn is up 28 1/2 cents per bushel and December soybean meal is up $6.80. The Dow Jones Industrial Average is up 366.92 points.
LIVE CATTLE:
The live cattle complex had another invigorating day as the market charged to new contract highs in several of the market's nearby contracts all thanks to the tremendous position of the market's fundamentals. The cash cattle market still hasn't seen any bids or asking prices released as both packers and feedlots go toe to toe again this week. To packers' advantage is the fact that they have ample supplies of committed cattle available to them through the month of July. But feedlots stand in a strong position as well as their showlists are green and they can afford to roll them over a week or two if need be. Nevertheless, traders see the cash cattle market's strong position coupled with consumers' strong demand as a force that will hard to shake. August live cattle closed $1.15 higher at $181.27, October live cattle closed $1.30 higher at $183.55 and December live cattle closed $1.15 higher at $187.00.
Tuesday's slaughter is estimated at 127,000 head, 1,000 head less than a week ago and 4,000 head more than a year ago. Monday's slaughter was revised to 120,000 head.
Boxed beef prices closed mixed: choice down $2.10 ($304.68) and select up $0.87 ($276.61) with a movement of 123 loads (77.07 loads of choice, 25.94 loads of select, 6.33 loads of trim and 13.42 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Steady to $2.00 higher. Even though packers are running smaller kills, the strong demand for beef should keep them active in the cash market, especially given that last week they weren't even able to get 70,000 head bought.
FEEDER CATTLE:
It was a bitter day for the feeder cattle complex as the market watched the nearby corn contracts run $0.26 to $0.29 higher as a dry weather outlook could affect the upcoming corn crop's yield. This obviously had a negative impact on the feeder cattle complex and, while it may seem like "putting the horse before the cart" as traders react to more weather news, Tuesday's trade was what it was. August feeders closed $1.25 lower at $248.00, September feeders closed $1.42 lower at $250.00 and October feeders closed $1.27 lower at $251.07. At Joplin Regional Stockyards in Carthage, Missouri, compared to last week, feeder steers sold unevenly from $4.00 lower to $5.00 higher. Feeder heifers sold steady to $3.00 higher. Supply was moderate with good demand. Feeder cattle supply over 600 pounds was 59%. The CME Feeder Cattle Index for July 17: up $0.72, $238.45.
LEAN HOGS:
The lean hog complex closed mixed with most of the market's deferred contracts able to close slightly higher while the market's nearby contracts struggled. It was encouraging to see that packers got more aggressive in Tuesday afternoon's cash trade, but they'll still likely need to procure more hogs throughout the week. It was interesting to note that the weighted average price for hogs was $104.46 in both Iowa/Minnesota and in the Western Corn Belt, but, in the Eastern Corn Belt, prices lagged behind as they only averaged $99.75. Pork cutouts totaled 331.38 loads with 298.45 loads of pork cuts and 32.94 loads of trim. Pork cutout values: down $0.03, $112.68. Tuesday's slaughter is estimated at 472,000 head, 2,000 head more than a week ago and 10,000 head more than a year ago. The CME Lean Hog Index for July 14: up $0.57, $101.60.
WEDNESDAY'S HOG CALL: Steady to somewhat higher. Packers will likely need to buy aggressively at least one more day this week, but whether or not they'll increase the market price when they do so remains a challenging question as packers keenly note the lower close in pork cutout values.
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