Market News

Hog futures supported by discount to cash

Chicago Mercantile Exchange live cattle futures were higher on technical buying and spillover from the sharply higher move in feeders. Also, contracts are below recent cash business. Gains in August were a little limited by spread trade out of that contract, into the more active October. August was $1.00 higher at $110.05 and October was up $2.45 at $109.05.

Feeder cattle were sharply higher, supported by the lower corn and the fundamental implications for feed of a large domestic crop. August was up $3.05 at $145.35 and September was $3.97 higher at $146.75.

Direct cash cattle markets were mostly at a standstill. Asking prices were $115 on the live basis and $184 to $185 dressed, with bids of $110 live and $175 to $177 dressed. DTN says a few hundred head in Iowa sold at $181 dressed, for delivery early next month. Widespread business this week is expected to wait until at least after the Fed Cattle Exchange activity Wednesday and could even be delayed until after the USDA’s cattle on feed report Friday. Available numbers are rising and this week’s slaughter could be the largest in months.

Boxed beef closed mixed on light to moderate demand and offerings. Choice was up $.03 at $198.95 and Select was down $.57 at $195.87. The estimated cattle slaughter of 119,000 head was unchanged on the week and up 6,000 on the year.

At the Kingdom City-Callaway Livestock Center feeder cattle in auction in Missouri, compared to the previous week, feeder steers weighing less than 550 pounds were steady to $5 higher, while steers weighing 550 to 750 pounds were $4 to $8 lower, and steers weighing more than 750 pounds were steady. Feeder heifers weighing less than 650 pounds were steady to $7 lower and heifers weighing more than 650 were steady to $2 higher. The USDA says demand was moderate to good for a moderate supply. 56% of the run were steers and bulls and 53% of the weekly offering weighed more than 600 pounds. Medium and Large 1 feeder steers weighing 600 to 700 pounds brought $149.50 to $160 and 99 head averaging 761 pounds were reported at $143 to $150. Medium and Large 1 feeder heifers weighing 500 to 590 pounds sold at $140 to $152 and 600 to 700 pound heifers weighing 600 to 700 pounds ranged from $132 to $147.

Lean hog futures were higher, supported by contracts’ large discount to the cash index. At the open Tuesday, the nearby October contract was at a roughly $15 discount to that cash index. October was $1.35 higher at $70.52 and December was up $1.20 at $64.70.

Cash hogs were mostly steady to lower. After the mixed trade Monday, buyers reasserted their leverage, helped out by good processing margins and steadily increasing market ready numbers. Early projections for this week’s slaughter top 2.3 million head, which would be up relatively modestly on both the week and the year. The seasonal increase in market ready numbers is really expected to start to gain steam around Labor Day.

Iowa/Southern Minnesota direct barrows and gilts closed $.55 lower at $72 to $78.75 for a weighted average of $77.46, the Western Cornbelt was down $.46 at $72 to $78.75 with an average of $77.46, and national direct business was $.35 lower at $72 to $78.75 for an average of $76.99. The Eastern Cornbelt had no recent comparison with a range of $75.74 to $77.25 and a weighted average of $76.27. Butcher hogs at the Midwest cash markets were steady at $50 to $55. Missouri direct butcher trade was $4 lower to $1 higher at $69 to $73 on light to moderate supply and demand. Sows were steady to $3 higher at $58 to $70. Illinois direct sows were steady at $58 to $72 on moderate demand for moderate to heavy offerings. Barrows and gilts were steady at $47 to $55 with moderate demand for moderate offerings. Boars ranged from $10 to $38.

Pork closed $.26 lower at $93.85. Picnics were down sharply, while loins, butts, and bellies were relatively modestly lower. The estimated hog slaughter of 446,000 head was steady with last week and up 13,000 from last year.