GENERAL COMMENTS:
Feeder cattle futures seemed to be on an early quest to regain at least a portion of the strong market losses seen earlier in the week. But the combination of softer cash cattle activity and general market apathy at the end of the session led to these early gains quickly eroding before the closing bell. The pushed spot August live cattle futures lower at the end of the session, although other nearby contracts were able to etch out the slightest of gains. Even though most live cattle contracts closed higher, this was still a moral defeat for the entire market, given the focus on rebounding from the late June market slide. Trade Thursday is expected to remain sluggish and likely once again unpredictable given the long holiday weekend approaching, and the lack of additional market news from a fundamental or technical standpoint before the end of the week. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.66 with a weighted average of $96.92 on 6,950 hogs. December corn closed up 6 1/4 at $4.423 and December soybean meal closed up $1.60 at $304.7. The Dow Jones Industrial Average is down 13.96 at 52,305.24.
LIVE CATTLE:
Live cattle futures closed mixed Wednesday in limited trade volume as traders not only took into account the inability of feeder cattle to hold early gains, but also the general lack of buyer interest moving back into the market after late-month liquidation seemed to be generally disheartening. August futures were the only contract to close lower in the nearby contracts, but even this shift remains concerning, especially given the chart direction as June contracts expired, and August took over as spot month contracts at a $12 per cwt discount. Chart shifts do not create a clear picture of the market; we all understand this. But for those traders who are measuring market direction from a 30,000 ft view, it does become a factor in at least a portion of the buying decisions. Trade is expected to remain extremely sluggish throughout the rest of the week, which may add even more volatility to the market Thursday.
Cash cattle trade started to develop through mid to late afternoon, although it is likely that additional trade will still need to be done before the end of the week for next week's full processing schedules. Light trade developed in several areas this afternoon, with Northern dressed deals at mostly $403, $5 lower than last week's weighted averages. Southern live trade came in at $255, $3 lower than the prior week's weighted averages. Much of this trade was done after the Mandatory cut-off, so it will be interesting to see just how many head traded when summaries are released tomorrow. August live cattle closed $0.60 lower at $241.825, October live cattle closed $0.08 higher at $236.725 and December live cattle closed $0.20 higher at $236.575.
Wednesday's slaughter is estimated at 110,000 head, 2,000 head more than a week ago and 11,000 head less than a year ago.
Boxed beef prices closed lower: choice down $1.90 ($391.26) and select down $1.99 ($369.69) with a movement of 113.12 loads (78.51 loads of choice, 15.38 loads of select, 9.12 loads of trim and 10.11 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady with Wednesday, Light but limited trade is still expected in the cash markets Thursday. The early moves of cattle, $3 to $5 per cwt lower than last week's average, seem to set a lower tone for the week.
FEEDER CATTLE:
Feeder cattle futures were probably the most disappointing complex in the livestock market Wednesday. Early buyer support stepped into the complex, helping prices rebound slightly from early-week losses. But the inability to sustain these triple-digit gains and close lower in all nearby contracts added even more concern and uncertainty to the entire feeder cattle market, which has tumbled significantly in the last week. With markets closed Friday, and many traders expected to remain absent Thursday ahead of the holiday break, it is unlikely that a strong market direction will develop yet this week. August feeders closed $0.45 lower at $364.15, September feeders closed $0.35 lower at $362.175 and October feeders closed $0.35 lower at $359.3. The CME Feeder Cattle Index for June 29: down $0.41, $376.99.
LEAN HOGS:
Lean hog traded caught wind of the lack of support through the rest of the complex, Wednesday afternoon. The most aggressive pressure was seen in nearby contracts, with August futures leading the market lower with a $1.15 per cwt loss. August futures remain extremely lightly traded, especially given the limited market volume and activity during this holiday week. But the inability to show positive results, given the current market pressure, is adding even more concerns both fundamentally and technically. Although the overall lack of interest in the market this week is making it hard to put too much stock into any daily moves, but the lack of optimism in the market continues to be very evident. July lean hogs closed $0.98 lower at $93.35, August lean hogs closed $1.15 lower at $97.05 and October lean hogs closed $0.50 lower at $81.50. Wednesday's hog slaughter is estimated at 474,000 head, 8,000 head more than a week ago and 2,000 head more than a year ago. Pork Cutouts totaled 239.37 loads with 197.98 loads of pork cuts and 41.39 loads of trim. Pork cutout values are up $0.22 at $95.71. The CME Lean Hog Index for June 29: down $0.17, $91.24.
THURSDAY'S HOG CALL: Steady. Limited market direction is expected through the end of the week. Thursday is expected to be the last full day of hog processing for the week through the country, with holiday schedules limiting overall plant capacities Friday and Saturday due to the Fourth of July Holiday.
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