DTN Closing Livestock Comments

GENERAL COMMENTS

Cash cattle trade is undeveloped with bids and asking prices remaining generally undefined through the end of the day Wednesday. The first evidence of cash market activity is likely going to be the fed cattle exchange auction, which will trade Wednesday morning. But feedlot trade will not likely fully develop until the second half of the week. According to the closing report, the national hog base is $0.31 lower compared with the prior day settlement ($77.00-$83.74, weighted average $82.08). Corn futures moved lower in light activity. September futures were 8 cents lower Tuesday. The Dow Jones Index is 100 points higher with the Nasdaq up 1 point.

LIVE CATTLE

Moderate-to-strong losses redeveloped through live cattle futures trade despite the lack of underlying buyer support seen early in the session. Traders continue to focus on the bearish tone of the Cattle on Feed report and the increased inventory levels as the supply levels may weigh on the ability to move beef through the system through the end of the year and well into 2018. This could bring even more pressure to the market through midweek. Technical weakness has also started to develop with front-month futures breaking through support levels. Beef cut-outs: higher, $1.04 higher (select, $198.98) to up $0.16 (choice, $207.62) with light demand and moderate offerings (58 loads of choice cuts, 23 loads of select cuts, 16 loads of trimmings, 15 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 lower. Market activity remains at a standstill with bids and asking prices poorly defined. The overall lack of support in futures trade will make it a challenge to push cash prices higher despite the desire to move additional at the end of the week. Active trade may be delayed to the end of the week.

FEEDER CATTLE

Firm losses quickly developed through the end of the trading session as early support quickly evaporated across cattle trade ($0.30 to $1.92 lower). Buyers fled the market near midday as the lack of support reached triple-digit levels through the last hour of trade following market activity despite position-taking and light-to-moderate support that developed over the first couple of hours. The inability for any support to stabilize in the live cattle market continues to concern traders about long-term market moves. CME cash feeder index: 7/24: $151.57, down $0.31.

LEAN HOGS

Firm buyer support quickly moved into nearby lean hog futures trade late Tuesday following pressure in cattle futures ($0.20 lower to $1.07 higher). The overall lack of volume during most of the session quickly shifted to increased buyer momentum as traders stepped into the market and pushed front-month August futures $1 per cwt higher with contract spreading seen surrounding additional widespread pressure developing in the cattle market. Overall softness remains cash hog values in the morning reports, which is creating some uncertainty through the end of the month. Carcass values moved higher with gains in all primals except hams. Pork cut-out: $102.40 up $0.56. CME cash lean index for 7/21: $91.13, down 0.54. DTN Projected lean index for 7/24 $90.44, down $0.69.

WEDNESDAY'S CASH HOG CALL:

50 cents to $1 lower. Follow-through pressure is expected to redevelop through the cash markets with traders looking for increased market weakness in the same levels seen earlier in the week. Most cash markets are expected to be seen 50 cents per cwt lower. Wednesday's slaughter expectations are set at 440,000 head with 65,000 likely to be seen Saturday.

Rick Kment can be reached at rick.kment@dtn.com

(AG)

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