The cash cattle trade jumped forward Friday as short-bought packers found it necessary to quickly move toward higher asking prices. Live sales in the South were marked at $112-$113.50, $4.50-$6 higher than last week. Dressed deals in the North ranged from $175-$180, $5-$10 higher than the week before. When the smoke cleared, moderate to active trade volume seemed evident in all major feeding states. According to the closing report, the national hog base is $0.10 lower ($70-$78, weighted average $76.61). Corn futures closed as much as 8 cents higher, supported by spillover bullish from the bean trade and ideas of hot and dry conditions over critical growing areas through the middle of the month. The stock market closed higher with the Dow 99 points higher and the Nasdaq better by 101.
Through about 90% of the trading day, cattle bulls seemed to exude both control and confidence in pushing prices forward. And who wanted to doubt their determination given the way higher and higher cash news kept coming in? Apparently, someone was harboring doubts. Prices simply fell apart late in the session, allowing contracts to settle mostly 2 to 57 lower than Thursday and nearly 200 points lower than early session highs. Our guess is that worries over midsummer beef demand resurfaced late in the day to haunt and undermine price potential. At any rate, spot August now stands to start out $6-$7 below the cash trade when biz resumes on Monday. Beef cut-outs: mixed, up $0.01 (select: $198.71) to off $0.40 (choice: $208.03) with light-to-moderate demand and moderate-to-heavy offerings (66 loads of choice cuts, 32 loads of select cuts, 16 loads of trimmings, 32 loads of ground beef).
MONDAY'S CASH CATTLE CALL:
Steady to $2 higher. Next week's cattle trade will begin quietly as packers restrict early efforts to the assessment of new showlists. We expect the new offering to be about steady.
Like their live counterparts, would-be feeder bulls were ambushed down the homestretch, forcing prices to slide as much as 100-200 points from the highs of the day. At the close, feeders settled 7 to 52 lower. Some might blame sharply higher corn prices in part for the reversal, but that may give feed cost freaks a bit too much credit. CME feeder index 07/05: $145.15, up $0.42.
Displaying more consistent logic than cattle futures, lean hog futures at least stayed defensive throughout the entire session. The realities of drifting cash bids and intensifying tariffs from major trading partners no doubt helped the board stay bearishly focused. For the most part, lean contracts settled 25 to 192 lower with spot July really taking on the China as expiration nears. Carcass value closed moderately lower, pressured by all primals except the belly. Pork cut-out: $85.52, off $0.77. CME cash lean index for 07/03: $82.24, off $0.27 (DTN Projected lean index for 07/05: $82.11, off $0.13).
MONDAY'S CASH HOG CALL:
Steady to $1 lower. Look for hog buyers to return to work on Monday with steady/weak bids.
John A. Harrington can be reached at firstname.lastname@example.org
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