DTN Closing Livestock Comments

Low Trading Volume Allows Cattle Prices to Chop Higher

Elaine Kub
By  Elaine Kub , Contributing Analyst
(DTN file photo)

GENERAL COMMENTS: From Friday to Friday, livestock futures scored the following changes: August live cattle up $2.65, October live cattle up $2.66, August feeder cattle up $1.98, September feeder cattle up $2.00, July lean hogs up $0.03, August lean hogs up $1.05. During the last half of this holiday week, cash cattle business was conducted mostly steady with last week at $109 (live). Dressed business at $180 was generally $1 per cwt higher than last week. Corn futures closed 1 penny higher, but the soybean complex experienced losses Friday, including July soybean meal down $2.20. The stock market (S&P 500) closed down 5 points Friday but netted weekly gains, including a fresh all-time high Wednesday.

LIVE CATTLE: There wasn't much enthusiasm for conducting cash cattle business late this week when everyone preferred to be lighting off fireworks or enjoying time on a lake instead. Live prices transacted on Wednesday were seen at $109, fully steady with last week, while dressed business at $180 in most areas was generally $1 per cwt higher. Total volume in the livestock futures market painted a similar picture: declining participation throughout the week. Friday's gains of $1.55 to $1.77 in the nearby live cattle contracts should therefore not be attributed much significance, having taken place during sparse and spotty trade. Beef cut-outs were lower Friday on light demand and moderate-to-heavy offerings (109 total loads of cuts, trimmings, and grinds), seen at $217.67 choice (down $1.58) and $194.80 select (down $0.56).

MONDAY'S CASH CATTLE CALL: Steady. Monday activities are typically limited to the collection of new showlists. We look for the offering to be steady around $109 live/$180 dressed.

FEEDER CATTLE: Feeder cattle futures moved higher Friday alongside gains in live cattle, but there was enough trend-based selling pressure to keep prices below $139 all through the October contract by the time the session closed. Given the steady pattern of rain showers seen all across cattle country over the past week, pasture and range conditions are expected to once again be beautiful in next week's Crop Progress report. CME cash feeder index for 7/4/19: $133.21, down $1.19.

LEAN HOGS: Hog slaughter has been running at upwards of 470,000 head per day lately, demonstrating the country's record-large supply, and the U.S. consumer hasn't been putting enough bacon on their Fourth of July grilled hamburgers in order to tighten up the market scenario for the overall pork cutout. Bellies have declined more than $5 per cwt over the past week and continued their slide Friday (down $0.79, to $98.28). Steep losses in lean hog futures Friday (down $1.425 in the July and down $2.725 in the October contract) sent the charts back on the downward trend they've been pursuing since mid-April's demand-rationing prices. Pork cut-out: $73.17, up $1.69. Updated CME cash lean index values aren't available due to packer submission issues since the 7/2 value: $73.22.

MONDAY'S CASH HOG CALL: Steady to $1 lower. Hog buyers are expected to resume work Monday with full knowledge that the market is in a bearish supply scenario.

Elaine Kub can be reached at elaine@masteringthegrainmarkets.com

(CZ)

Elaine Kub