Sort & Cull

While it didn't cause me to turn off the air conditioner or stop wearing industrial deodorant, I was at least momentarily cheered by the 30-day forecast issued by the NWS earlier this week. This conclave of scientists, witchdoctors and zombie futurists is calling for a perfect late-summer combination of below-normal temps and above-normal precip for most of the Central Plains and Western Corn Belt.

Would I take it to the bank? Maybe bundled in a deposit slip with confederate script and bitcoins.

Granted, longer-term weather forecasting can't exactly claim an all-star batting average. But the 30-day swing is probably reliable enough to keep a "good glove" (perhaps the only glove in this case) from being sent down to the minors. And at least it gives the heat-stroke victims of July something to hope for.

That's more than you can say for the stubbornly sticky discounts of August live cattle and lean hog futures.

If the local weather person were to read late-summer livestock futures like a blip on Doppler radar, the copy might sound something like this: "If you thought you were sweating now, prepare to take another salt pill." Both nearby cattle and hogs contracts continue to warn cash marketers that the worse is yet to be.

It may be only cold comfort (if only it literally was), but such August pessimism in mid-July is not particularly unusual. Bullish inspiration smack dab in the middle of dog days can be tough to come by.

On one hand, the tightest of market hog numbers may already be falling in the rearview mirror. On the other hand, a significant shift toward a more manageable fed cattle offering could still be weeks away. In both cases, red meat demand has moved from the shiniest luminosity of the second quarter to the dark side of the summer moon.

Yet, in the game of anticipation, my sense is that the bearish guns of August look somewhat more threatening for the hog trade than its fat-cattle counterpart. While the August lean hog contract is nearly $5 under the cash index at this time, no one in the hall will dispute the likelihood that the next major swing in commercial pork production will be price negative. Though some may criticize late-summer futures for prematurely stewing over this dangling shoe, virtually all agree that whatever inevitably drops will be closer to a steel-toed work boot than a padded ballet slipper.

Conversely, I see August live cattle as a better candidate for rehabilitation. Indeed, my guess is that futures are now working hard to pour the footings for a seasonal bottom. Historical price data is really quite impressive in that regard, predicting that the toughest feedlot sales of midsummer typically come and go sometime between late July and early August.

Not only is the cattle market not asked to dread a significant increase in relatively short-term tonnage as does the hog market, it can positively anticipate at least one more round of robust summer beef demand linked to Labor Day.

John Harrington can be reached at feelofthemarket@yahoo.com

Follow John Harrington on Twitter @feelofthemarket

(AG)

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