The cash cattle trade proved to be very slow in developing this week. In fact, several areas are still trying to prime the pump in terms of trade volume. At this time, light trading is evident in parts of the North with dressed deals marked at $180, $2 to $6 higher than last week's weighted averages. On the other hand, the South remains at a standstill. Bids have improved some, but still remain $4 to $5 under asking prices of $114 to $115. Such sticky movement reminds us of the slow trade volume experienced last Friday. We assume that more business will develop later Friday. The National hog base closed off $1.18 compared with the Prior Day settlement ($64-$70, weighted average $70.95). From Friday to Friday, livestock futures scored the following changes: Aug LC up $4.37; Oct LC up $2.88; Aug FC up $2.95; Sep FC up $3.48; Aug LH off $3.70; Oct LH off $4.03. Corn futures closed 4 cents higher, supported by technical-buying and signs of a weakening dollar. The stock market closed slightly lower with the Dow off 6 and the Nasdaq down 5.
Futures closed mixed, up 70 to off 40. Although several live contracts put in a solid week, bulls needed evidence of determined packer spending in order to push higher. They didn't get it. Traders will be anxious to see when business resumes on Monday how hungry beef processors eventually turned out to be. Traders were also cautious before the release of the on-feed report and the midyear inventory. Both reports turned out to be fairly well anticipated. Total on feed as of July 1 was 4% larger than a year ago, placement was up 1% and marketing was up 1%. The midyear cattle inventory reported total cattle numbers 103.2 million head, 1% larger than the previous year and the largest midsummer census since 2008. Beef cutouts: steady to weak (choice, $204.17 off $0.32, select $197.00 up $0.08) on light-to-moderate demand and light offerings (40 loads of choice cuts, 09 loads of select cuts, 17 loads of trimmings, 32 loads of coarse grinds).
MONDAY'S CASH CATTLE CALL:
Steady. Once again we are unsure as to where the cash market has actually landed at the end of the week. Accordingly, a steady call should be taken with a grain of salt. Monday's activity will be limited to the collection of new showlists. We expect ready numbers to be steady to a little larger than this week.
Futures closed modestly lower, off 5 to 77. Action in the feeder market was generally listless, mirroring the uncertain tone on display in the live trade. We suspect the major features were short-covering on one hand, and some nervousness tied to higher corn prices. CME cash feeder index: 07/19: $148.02, off $0.29.
Futures closed significantly lower, off 80 to 127. Lean hog contracts closed defensively with traders bothered by the cash market's steady erosion through the week and worries that neither domestic nor foreign demand will be strong enough to handle record tonnage expected over the next several quarters. News that a tornado hit the JBS plant at Marshalltown, Iowa, certainly did not help psychology in that regard. Chain speed was clearly slower Friday because of that disaster (434,000), and we expect it will take a while for the facility to regain full production potential. We should know more on Monday in that regard. Pork cutout: $80.86 (FOB Plant) off $1.83. CME cash lean 07/18: $78.62, off $0.53 (DTN Projected lean index for 07/19: $77.83, off $0.79.
MONDAY'S CASH HOG CALL:
Steady to $1 lower. Look for hog buyers to resume their defensive strategy on Monday, hoping to reduce the cost of live inventory further while minimizing losses in carcass value.
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