We may see cash cattle trade Thursday after getting a bullish nudge from the futures market Wednesday, but so far, bids and current asking prices are far apart with offers around 114.00-115.00 in the South, and 180.00-183.00 in the North. Wednesday's slaughter of 119,000 was up 2,000 from a year ago. This week, cattle are also looking at several days of stressful conditions in the southwestern Plains with daytime temperatures at triple digits and early morning temperatures still in the mid-80s.
Hog buyers still have ready barrows and gilts on a run. Look for opening bids to start out this morning steady to $1 lower after August hog futures fell another 70 cents on Wednesday. Processing margins are slowly improving, but available numbers may also becoming more ample. This week's kill could be as large as 2.365 mllion head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Wednesday's new three-month high in August cattle is a sign of strong demand for current cattle. | 1) | It is possible that we are getting closer to a slower beef demand period in summer. |
| 2) | The combination of short-bought packers (tied in part to last week's limited buy), relatively decent processing margins, and tighter supplies of formulas in the second half of July (especially in the South) bodes well for cash stability over the next several days. | 2) | Friday's July 1 cattle on-feed estimate is expected to be 4% higher than a year ago. |
| 3) | The pork carcass value jumped solidly higher Wednesday, supported by better buying interest for loins, hams, and ribs. | 3) | Hog buyers are experiencing no problems moving big numbers. |
| 4) | Closing in on $16, the historically large discount of October lean hog futures to spot August could easily turn out to be exaggerated, more a function of emotional psychology than a realistic balance of late-summer/early-fall supply and demand. | 4) | The summer highs for the pork cutout value are now likely in the rearview mirror, especially as harvest levels are set to continuously increase over the course of late summer and fall. |
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