Early livestock comments
Current feedlots, a strong board and a full kill week coming up combined to force packers to pay up $2.00-$3.00 on a live basis for cattle lasst week. Higher prices were paid despite the fact that it will push kill/cut margins very close to even. Cattle traded $114.00-$115.00 live in the south. Cattle in the north traded at $184-$185 dressed, and $115.00-$115.00 live. It is not unusual for cattle prices to increase the week after the 4th of July. Sources expect the market to trade a little easier this week since packer margins will come in quite a bit. There is talk that packers will begin cutting back on slaughter rates in an effort to shore up beef values.
The choice cutout was down $0.48 at $179.19 Friday night, with the select up $0.05 at $174.22. Spot sales were a bit slow early in the week, but picked up later. The cutouts gained most of the week, but values began to slip on Friday. Loins were the big driver of the higher cutout values during the week. Ribs, on the other hand struggled all week as did chucks.
Hog calls are steady to $1.00 lower this morning. Packer margins are still poor, and they are basically done buying for this week. An additional packer is dark today, taking a floating holiday, so slaughter will be lighter than usual. Keep in mind that we will be comparing to some fairly small hog runs last year at this time due to both significant heat stress and poor quality corn. Weight gains have been very good this year due to better quality corn. While the weather has been hot at times, the heat has been relatively short lived, and temperatures have generally moderated at night, allowing hogs to eat.
The pork cutout gained $0.56 Friday night. Loins and butts were steady, with hams unquoted. The holiday shortened slaughter last week helped to support pork values, and many cuts worked higher. One surprise for the market was the $1.40 price tag on two loads of bellies Friday morning. It was a surprise because more than one packer had a few loads of bellies they needed to sell. In fact there was plenty of trade at the previous quote of $1.31 on the various weight groups by the close of the day. We expect that $1.40 to drop off this week, especially since the industry will be looking at a full slaughter week and processors are actively pulling on freezer inventories.
There was talk of Russian export business late last week that reportedly boosted the futures market. Our sources indicate it is no more than the ongoing business that has been done all year, and is thus not expected to provide any boost to pork values.