After Thursday saw light trade in Nebraska and Iowa around $175, some cash business may trickle in early Friday, but it also seems likely that more will develop after USDA's Cattle on Feed report at 2 p.m. CDT. Dow Jones survey is expecting the Sept. 1 inventory to be up 5.3% from a year ago, based on a 4% increase in placements and even marketings. December cattle have been holding near $118 this week, just a dollar shy from their highest price of the year, helped by active demand and in spite of consistently higher on-feed numbers like the one expected later Friday.
Lean hog futures continue to claw back from their August lows, helped this week by a $5.60 gain in pork cutout values since Friday. December hogs are now near their highest prices in three months, but it is difficult to understand just yet what might push prices higher from here as U.S. hog supplies should still be ample for this year's demand. The next update of hog inventories happens to be scheduled for next Thursday, Sept. 27 and USDA will likely remind us there are plenty of hogs, but a surprise is always possible.
| BULL SIDE | BEAR SIDE | ||
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Live cattle futures are still holding firm after breaking into new high ground last Friday, possibly putting shorts under stress.
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Select cuts of boxed beef are down a couple of dollars since Friday, possibly hinting at a pause in demand.
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Last week's beef export sales were decent, at 15,900 metric tons (mt), thanks to top buyers, Mexico and Hong Kong.
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December cattle are near their highest prices of 2018, a possible source of resistance.
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Pork cutout values continue to firm through the month of September with carcass prices up $5.60 since last Friday.
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December hogs have rallied $14 from last month's lows, but without a strong bullish argument, further gains may be difficult.
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Pork export sales had another good week, totaling 22,900 mt and are holding a 3% gain for the year in spite of trade war concerns.
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Next week's Hogs and Pigs report from USDA could bring about renewed selling, if it shows another quarter of ample inventories.
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