Cash cattle trade should be seen Friday; limited activity developed in most areas late Thursday. Cash trade posted a wide range of $110 to $112 live and $183 to $185 dressed. This is $1 to $2 per cwt lower than last week's live basis and steady to $1 per cwt higher on a dressed basis. The trade totals reported over the last two days are enough for packers to fuel current procurement needs, leaving additional trade expected before the weekend. Packer interest should redevelop in the same price ranges as Thursday, although feeders may not be as aggressive on asking prices as the day continues. Asking prices are $115 live and $188 dressed early Friday but may change, following futures direction later in the day. Cattle futures are expected mixed with a weaker undertone across the entire complex. This may spark some additional pressure early. August feeder cattle futures have fallen $3.50 per cwt since Monday, creating potential end-of-week short-covering opportunities despite the continued concern of higher feed costs. Live cattle futures remain stuck within the $4 per cwt trading range seen over the last month with little indication traders are willing to break out of this pattern even with growing pressure in feeder cattle trade and struggling beef values.
Lean hog futures are expected mixed as strong underlying support in most contracts Thursday continues the choppy market shifts which have developed across the complex over the last several weeks. The hog complex continues in a weaker trend, although moderate to wide market swings may limit aggressive downside moves over the next few weeks. July futures remain near support levels of $83.35 per cwt; a weekly close below these levels could spark additional underlying weakness through the entire complex. Cash trade is called steady to $1 lower Friday morning with most bids steady to weak. Expected slaughter Friday is 465,000 head. Saturday runs are expected at 68,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Live cattle futures have continued to hold well above short-term support levels despite growing bearishness in feeder cattle trade and uncertainty in grain markets. | 1) | Feeder cattle trade this week continued to focus on the sharp gains in corn prices. Traders are consumed by concerns of feed price moves and potential long-term supply levels of high-quality feed over the next year. |
| 2) | Choice boxed beef prices have continued stable through the week with limited pressure despite firm market losses in select cuts. This is pointing to additional underlying support. | 2) | Cash cattle prices appear to be weakening through despite light midweek trade at higher prices. The firm underlying softness in futures and eroding wholesale beef values are likely to add even more pressure to cash values Friday. |
| 3) | Strong futures support moved back into deferred lean hog trade late Thursday. With prices posting triple-digit gains, renewed end-of-week buying is likely to continue. | 3) | Strong price pressure in spot July lean hog trade Thursday is creating concern, significantly narrowing the premium between July and August futures. This may lead to additional end-of-week softness. |
| 4) | Moderate to strong domestic pork demand is expected to continue through the upcoming days and weeks with renewed support developing late in the week in rib values, which helps to support summer pork demand. | 4) | Pork trade issues continue to weigh on the market as traders focus on China's growing need for pork due to African swine fever. But, with current trade issues, this market remains generally unavailable for U.S. pork. Without a meaningful and speedy trade deal, it is unlikely that U.S. pork will fill this demand. |
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