Wednesday Midday Livestock Market Update - Complex Shoots Higher After Tuesday's Disappointing Close

GENERAL COMMENTS:

The livestock contracts are running higher into Wednesday's afternoon as the market takes advantage of trader support while the opportunity lasts. The lean hog complex is seeing robust fundamental support in the form of a strong cash hog market and in higher midday pork cutout values, but largely the cash cattle market has yet to see any cattle trade. December corn is down 6 1/4 cents per bushel and December soybean meal is down $7.10. The Dow Jones Industrial Average is up 352.11 points.

LIVE CATTLE:

The live cattle market is having a stellar day in its nearby contracts as the market works to "make hay while the sun is shining," or maybe in this case, its while traders are showing interest in the market as support has been hit and miss. August live cattle are up $1.27 at $137.85, October live cattle are up $1.67 at $143.80 and December live cattle are up $1.45 at $149.72. The August contract is selling for a $6.00 to $9.00 discount compared to the rest of the 2022 live cattle contracts, which is somewhat expected given that we are still in the beginning days of August and the market is looking for direction. If boxed beef prices and slaughter speeds continue to see strong consumer support and continue to see fast chain speeds, then there's plenty of support to drive the market higher. However, if either of those two facts weaken, then the August contract could come under pressure. The cash cattle market has only seen a handful of cattle trade and no tone has been set in the market yet. Asking prices in the South are noted at $136 to $138 and still are unknown in the North.

The Fed Cattle Exchange Auction held Wednesday reported 9 lots, totaling 1,065 head of cattle, none of which sold.

Boxed beef prices are mixed: choice up $0.29 ($268.75) and select down $0.05 ($241.50) with a movement of 64 loads (25.43 loads of choice, 8.61 loads of select, 17.90 loads of trim and 11.72 loads of ground beef).

FEEDER CATTLE:

As the nearby corn contracts see a minor $0.05 to $0.06 regression, the feeder cattle contracts are seeming to want to make up for Tuesday's lousy close as they push over a $1.00 advancement throughout the market. August feeders are up $1.25 at $179.37, September feeders are up $1.52 at $182.97 and October feeders are up $1.50 at $185.70. The support for feeder cattle and even weaned calves has been tremendous and so long as the market can keep this momentum through closing, pushing higher into Thursday should be no issue so long as outside pressures don't detail the market's focus.

LEAN HOGS:

As the lean hog complex leans into Wednesday's afternoon, the market is seeing tremendous fundamental support through higher cash prices and on a large volume of hogs traded, and in higher midday pork cutout values. Unfortunately, the market's run at higher cash and continued consumer support through pork cutouts isn't giving traders enough confidence to blow through resistance levels. Yes, the nearby lean hog contracts are trading higher, but the market isn't willing to push the complex outside of its current trading range. October lean hogs are up $0.50 at $96.75, December lean hogs are up $0.25 at $87.97and February lean hogs are up $0.02 at $90.97.

The projected lean hog index for Aug. 2 is down $0.63 at $120.94 and the actual index for Aug. 1 is down $0.30 at $121.57. Hog prices are higher on the Daily Direct Morning Hog Report, up $13.69 with a weighted average of $129.32, ranging from $114.50 to $135.00 on 21,281 head and a five-day rolling average of $124.72. Pork cutouts total 129.42 loads with 114.57 loads of pork cuts and 14.85 loads of trim. Pork cutout values: down $1.26, $129.76.

Wednesday Morning Livestock Market Update - Uncertainty to Dominate Market

GENERAL COMMENTS:

Traders in the cattle complex seemed more concerned over what was taking place in other markets as well as what impact the Pelosi visit to Taiwan could have on beef. China has been a consistent buyer of U.S. beef and there is concern China may retaliate through increasing tariffs or purchasing fewer agricultural products for a time. That would not be supportive to beef prices as it could reduce export demand at a time when cattle supplies are plentiful. Boxed beef prices declined Tuesday with choice down $2.14 and select down $1.35. There were a few cattle traded Tuesday at steady prices with last week, but not enough to determine cash for the week.

Hogs could not find much support Tuesday with spread trading taking place, putting pressure on August and October contracts. Traders were eagerly awaiting to see whether packers would follow the weekly pattern of higher cash on Tuesday and were not disappointed. The National Direct Afternoon Hog report showed cash up $5.19. There is a strong possibility cash will be higher again Wednesday. Cutouts were also strong with a gain of $3.32 supported by a gain of $26.57 for bellies. This will likely influence trading activity Wednesday.

	BULL SIDE		BEAR SIDE
1)	If cash is no worse than steady this week, traders may feel more confident the market may have found support.	1)	Packers are expected to remain unaggressive this week and may bid lower for cattle. Feedlots do not seem in the position to hold out.
2)	Slaughter pace remains brisk, which is moving through heavier cattle supplies, keeping market-ready cattle current.	2)	The concern over the impact of Pelosi's visit to Taiwan may leave the market subdued with little direction.
3)	Strong cash and cutouts for hogs should be reflected in Wednesday's trading activity with traders buying more aggressively.	3)	Hog slaughter still is running at a less-than-desired pace. This leaves sufficient supply available to packers.
4)	Packers are expected to bid up for hogs again Wednesday as demand continues to hold well as reflected by strong cutouts.	4)	Traders anticipate higher cash again Wednesday which may be already factored into the market due to this being a consistent pattern by packers.

Tuesday Closing Livestock Market Update - Outside Pressures Push Market Lower

GENERAL COMMENTS:

The livestock complex was hesitant about Tuesday's trade from the get-go as the market desperately needs fundamental support, but as concerns grew about the Nancy Pelosi visiting Taiwan and how that would affect the U.S. and China relationship, the futures market grew extremely quiet. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $5.19 with a weighted average of $121.33 on 9,140 head. December corn is down 15 1/2 cents per bushel and December soybean meal is up $3.80. The Dow Jones Industrial Average is down 402.23 points.

LIVE CATTLE:

The live cattle market is wading its way through the dog days of summer and you can feel the painstaking dullness that's overcome its market. As the futures complex continues to erode and cash cattle price see $1.00 or $2.00 cut out of its market weekly, it's tough to watch. However, while those factors remain true, it's imperative that we continue to fixate on both slaughter and boxed beef prices as they will likely determine the market's fate until later this fall when supplies run thin. If demand can keep packers running aggressive slaughter speeds then the market stands a chance at chopping sideways through the August and October contract months, but if demand weakens, then the downside to the market is treacherous. August live cattle closed $0.20 lower at $136.57, October live cattle closed $0.50 lower at $142.12 and December live cattle closed $0.22 lower at $148.27. The cash cattle market didn't see much trade develop other than a handful of cattle that sold in Iowa. Wednesday's market will likely see interest develop from packers and it's likely that this week's business is again steady to somewhat lower and on a thin volume. Asking prices in the South are noted at $137. Tuesday's slaughter is estimated at 124,000 head, 1,000 head less than a week ago and 1,000 head more than a year ago.

Boxed beef prices closed lower: choice down $2.14 ($268.46) and select down $1.35 ($241.55) with a movement of 157 loads (79.32 loads of choice, 27.15 loads of select, 10.98 loads of trim and 39.18 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: $1.00 to $2.00 lower. Packers will likely work the market lower again this week as they posses a lion's share of the market's leverage right now.

FEEDER CATTLE:

The feeder cattle market found no love nor favors in Tuesday's market. It's disappointing that the market had to fight outside pressures on Tuesday, as the market could have closed higher if it only had to focus on cattle market matters as opposed to the situation brewing between the U.S. and China as Nancy Pelosi visits Taiwan. With the corn market closing mostly $0.15 lower in its nearby contracts, Tuesday's feeder cattle market should have been trading higher, but instead the complex eroded. August feeder cattle closed $1.52 lower at $178.12, September feeder cattle closed $1.65 lower at $181.45 and October feeder cattle closed $1.27 lower at $184.20. Regardless of what the futures complex did, feeder cattle buyers were able to look at the corn market's regression and felt stronger about buying both calves and feeders. The CME Feeder Cattle Index for Aug. 1: down $0.34, $174.40.

LEAN HOGS:

Even with pork cutout values and cash prices both closing higher, the nearby lean hog contracts rounded out the day lower while the deferred contracts added mildly to their contracts. August lean hogs closed $0.60 lower at $119.85, October lean hogs closed $0.60 lower at $96.22 and December lean hogs closed $0.02 higher at $87.75. With sound fundamental support through closing, the lean hog market stands a significant chance at trading higher in Wednesday's market so long as outside pressures don't become too burdensome. Belly prices continue to jolt higher as this afternoon bellies jumped $26.57 higher from Monday's price, showing that American's love for bacon isn't going anywhere. Pork cutouts totaled 283.38 loads with 263.51 loads of pork cuts and 19.87 loads of trim. Pork cutout values: up $3.32, $131.02. Tuesday's slaughter is estimated at 472,000 head, 5,000 head more than a week ago and 3,000 head more than a year ago. The CME Lean Hog Index for July 29: up $0.45, $121.87.

­­­­­WEDNESDAY'S CASH HOG CALL: Higher. With less than 10,000 head traded in Tuesday's market, it's likely that Wednesday's cash hog market is going to likely be aggressive. We will most likely see prices higher and larger volumes traded.

Tuesday Midday Livestock Market Summary - Pressure in the Complex

GENERAL COMMENTS:

The livestock complex has become consumed with a lower tone in Tuesday's market. Both the live cattle and lean hog contracts have some rational to their regression thanks to a lousy cash cattle market and a disappoint hog slaughter on Monday. More than anything, however, it's seeming like the market is holding its breath to see what happens between the U.S. and China as Nancy Pelosi visits Taiwan. December corn is down 8 3/4 cents per bushel and December soybean meal is up $5.80. The Dow Jones Industrial Average is down 37.73 points.

LIVE CATTLE:

The live cattle market is overcome with the same sense of caution as the rest of the livestock complex. It's not helping the market that boxed beef prices are lower and that the cash market isn't expected to trade anything better than steady this week. August live cattle are down $0.17 at $136.57, October live cattle are down $0.40 at $142.22 and December live cattle are down $0.12 at $148.37. Asking prices are starting out at $137 in the South and the North has yet to disclose what they'd like to see. It's unlikely that any cash cattle trade begins until Wednesday as packers look to see what develops in the China-U.S. situation; any negative developments will give them more reason to slash cash prices.

Boxed beef prices are lower: choice down $1.45 ($269.15) and select down $0.59 ($242.31) with a movement of 79 loads (37.52 loads of choice, 16.29 loads of select, 9.38 loads of trim and 15.37 loads of ground beef).

FEEDER CATTLE:

As the corn market continues to drift $0.07 to $0.08 lower, one would think that the feeder cattle market would trade higher, but as traders keep a safe distance from the marketplace amid outside pressures, feeders are scaling lower into Tuesday's afternoon. August feeders are down $1.52 at $178.12, September feeders are down $1.52 at $181.60 and October feeders are down $1.30 at $184.17. Unfortunately, without any support stemming from the live cattle complex, it's unlikely that the market will be able to close higher even as corn trades lower and as feeder continue to bring more money in sales throughout the countryside as the market seems fixated on one thing and one thing only -- what's China going to do next?

LEAN HOGS:

The lean hog complex hasn't seen much interest from packers, which the market was hoping to wake up to as it needs to find something positive in Tuesday's market to overcome Monday's measly slaughter pace of 408,000 head. Packers are still expected to buy aggressively this week in the cash hog market as supplies are thin -- if not throughout Tuesday's market, then almost certainly on Wednesday and Thursday's market. Midday pork cutout values are higher, which is necessary to keep the market from fainting lower amid weaker slaughter speeds. If Tuesday's slaughter runs as faintly as Monday's did, then a lower tone could be setting into the complex. August lean hogs are down $0.55 at $119.90, October lean hogs are down $0.90 at $95.92 and December lean hogs are down $0.35 at $87.37.

The projected lean hog index is unavailable at this time. Hog prices are higher on the Daily Direct Morning Hog Report, up $0.70 with a weighted average of $115.63, ranging from $113.50 to $131.00 on 4,367 head and a five-day rolling average of $124.15. Pork cutouts total 165.23 loads with 156.78 loads of pork cuts and 8.45 loads of trim. Pork cutout values: up $2.52, $130.22.