GENERAL COMMENTS:
Feeder cattle futures were the main focus through most of Tuesday's trading session, with active triple-digit losses seen through the entire trading day. Although feeder cattle contracts recovered slightly from session lows seen during the morning trade, the swift shift from last week's highs continues to add uncertainty not only to the feeder cattle complex but to the entire cattle market. Live cattle futures followed the feeder cattle market lower, although losses were much more subdued in most contract months. Although spot month June contracts closed higher on the last day of June, most of this price support developed from position squaring ahead of the end of the month and quarter in the expiring contracts. Limited activity is also expected in the next couple of trading sessions across all livestock markets, with trade closed Friday for the Fourth of July Holiday, leaving general trade activity limited throughout the week. Hog prices closed higher on the Daily Direct Afternoon hog report, up $4.14 with a weighted average of $97.58 on 9,679 hogs. September corn closed up 6 1/2 at $4.168 and July soybean meal closed steady. The Dow Jones Industrial Average is up 135.07 at 52,317.81.
LIVE CATTLE:
Live cattle futures followed the feeder cattle complex lower in all contract months except the front month June contract, which is expiring. August futures led the market lower with a $1.15 per cwt loss, moving to $2.42 per cwt for the day. This move pushed prices below the 40-day moving average for the first time in 2 weeks, adding to underlying technical market concern across the entire complex. Despite the strong support in beef cutout values in the morning report, traders still seem cautious at best to actively step back into the market. June contracts closed at $258.20 per cwt, nearly $16 per cwt above the upcoming front month August contracts. This contract roll will adjust chart levels, creating additional chart uncertainty for those strictly focused on technical and chart direction when entering or exiting the market. End-of-the-month and quarter trade adjustments and positioning were likely the main order of business Tuesday, while overall trade volume was already extremely subdued due to holiday week absences.
Cash markets remain at a near standstill, with asking prices and bids still unavailable in all areas of cattle country. It is likely that interest is expected to develop sooner rather than later, ahead of markets remaining closed Friday and the upcoming Fourth of July Holiday. But for now, both sides continue to wait for a move from the other side. June live cattle closed $0.80 higher at $258.2, August live cattle closed $1.15 lower at $242.425 and October live cattle closed $0.73 lower at $236.65.
Tuesday's slaughter is estimated at 110,000 head, steady with a week ago and 7,000 head less than a year ago.
Boxed beef prices closed mixed: choice up $1.72 ($393.16) and select down $2.50 ($371.68) with a movement of 102.20 loads (67.52 loads of choice, 18.78 loads of select, 5.56 loads of trim and 10.34 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Steady, Limited activity is expected early Wednesday morning, although interest from both sides is likely to develop sometime during the day Wednesday based on the desire to wrap up business before the Fourth of July Holiday Weekend.
FEEDER CATTLE:
Feeder cattle futures turned lower once again Tuesday. The good news in the market, if there was any throughout the session, is that prices were able to bounce off of session lows seen early in the Tuesday trading session. But this still continues to add uncertainty through the entire complex as prices have quickly eroded from last week's highs, and the aggressive nature of the recent pressure could leave room for additional market weakness. Even with the recent market pullback, prices are still firmly above both the 40-day and 100-day moving averages, which is keeping many traders positive about potential market support. But the strong move higher in prices over the past several months is still keeping prices focused on just how much additional support may develop despite the extremely tight cattle and beef supplies. Traders are now expected to step back into the complex Wednesday morning with a new month and quarter on the books. This could help to create some additional optimism through the market, but the limited holiday trade seen this week could limit significant market activity and price support. August feeders closed $2.88 lower at $364.6, September feeders closed $3.23 lower at $362.525 and October feeders closed $3.28 lower at $359.65. The CME Feeder Cattle Index for June 26: down $0.59, $379.92.
LEAN HOGS:
Lean hog futures ended the trading session similar to where traders entered the Tuesday trading day, mixed with very little sense of significant market shifts. In July through October contracts posted moderate end-of-the-month gains, while deferred futures still posted additional pressure based on concerns that long-term demand for pork may not easily develop. Given that prices are at or near yearlong market lows, traders seemed to be more focused on end-of-the-month and quarter position adjustments, rather than any fundamental or long-term technical trade direction. This allowed prices to still hover well below the 40-day moving average, with concerns that global demand for pork and export markets may remain uncertain at best through the rest of the summer. July lean hogs closed $0.50 higher at $94.325, August lean hogs closed $0.93 higher at $98.2 and October lean hogs closed $0.48 higher at $82.00. Tuesday's hog slaughter is estimated at 479,000 head, 7,000 head fewer than a week ago and 11,000 head more than a year ago. Pork Cutouts totaled 248.73 loads with 222.09 loads of pork cuts and 26.64 loads of trim. Pork cutout values are down $2.17 at $95.49. The CME Lean Hog Index for June 26: down $0.14, $91.41.
WEDNESDAY'S HOG CALL: Steady. Limited long-term direction or aggressive cash buying is expected with the end-of-week holiday break approaching. Packers will likely focus on immediate needs, pushing off longer-term buying activity until early next week.
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