Heading into Thursday's session, no significant cash cattle trade has taken place yet, with live bids around $108 and offers closer to $113 and $114. The futures market is not offering any significant tips either as December cattle has barely budged this week, staying close to Friday's close of $118.05. Beef exports are doing well in 2018, up 17% from a year ago at this time, and Thursday morning will give us the next weekly update. We won't be holding our breath for much cash trade on Thursday as the bulk of action probably won't happen until after Friday's Cattle on Feed report is released at 2 p.m. CDT. Dow Jones survey expects a 5.3% increase in the Sept. 1 on-feed inventory with placements up 4% from a year ago.
So far, lean hog futures are staying firm with December hogs near their highest prices in three months. It is also helpful that pork cutout values are higher this week, up $5 from Friday. An active slaughter pace plus new-found acceptance in the retail market is giving hog prices an unexpected boost after futures neared their lowest prices in 15 years just a little over a month ago. Even so, it is still difficult to get too bullish on the outlook for hog prices when supplies seem more than adequate. Thursday morning will bring a weekly update on export sales and next Thursday, USDA releases its quarterly Hogs and Pigs report -- always a candidate for surprise.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Live cattle futures are still holding firm after breaking into new high ground on Friday, creating possible concern among shorts.
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Select cuts of boxed beef are down a few dollars since Friday, possibly hinting at some longer-term weakness.
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| 2) |
Last week's new high in October feeder cattle is still holding firm, suggesting feeder supplies may be less available than anticipated.
| 2) |
December cattle are near their highest prices of 2018, a possible source of resistance.
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| 3) |
Pork cutout values continue to firm through the month of September with domestic movement of pork remaining strong following the Labor Day holiday.
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December hogs have rallied $14 from last month's lows, but without a strong bullish argument, may not have much farther to go.
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| 4) |
The ability of December hogs to push through resistance at $57 shows another level of unexpected bullishness from hogs.
 | 4) |
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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