Thursday Morning Livestock Market Summary - Today's Focus Directed on Hog and Pork Reports

 General Comments:

Cash cattle markets remain elusive for the most part with a few deals trickling in here and there over the last two days, but not enough to establish an accurate market trend. The combination of stability in boxed beef values and live cattle futures ability to regain firm footing on Wednesday is going a long way in helping to sustain early-week resolve in cattle feeders as asking prices remain elevated going into the last half of the week. With both sides focusing on potential tighter supplies of market-ready cattle through the next six weeks, and the upcoming Cattle on Feed report Friday afternoon, it would not be out of line until the bulk of cash cattle trade was delayed until late Friday. Pushing off cash cattle sales until after the Cattle on Feed report is not totally unusual. Bids are expected to improve significantly through the day Thursday, although at this point, feeders are looking for steady-to-higher price levels from last week's levels. Futures trade is expected to remain mixed early Thursday morning. Most of the attention during the day is likely to be focused on the lean hog complex with export news a main priority, while hog inventories will be seen in the afternoon report. But the fact most traders will not be squarely focused on cattle trade could allow for moderate-to-wide price shifts due to limited trade in both live cattle and feeder cattle trade. With Friday's Cattle on Feed report looming, there is likely to be some additional pre-report positioning, but most of this activity is likely to be delayed until Friday morning.

Essentially Thursday is shaping up to be a "hog and pork report day" with the focus on the afternoon Hogs and Pigs report helping to give a better understanding of not only current inventory levels, but longer-term production expectations. Thursday morning's weekly Export Sales report is even more important this week as it will be the first report following activity surrounding the widespread ban on German pork. The lack of active export gains reported to normal trading partners is likely to create moderate price pressure at the opening bell in nearby and deferred contracts. Although it will be important not to place too much emphasis on short-term export news during the morning, but traders seem to be looking for quick evidence of increased pork movement in order to sustain recent market momentum. Cash hog prices are expected $1 lower to $2 higher with most bids expected steady to $1 higher. Slaughter Thursday is expected at 486,000 head. Saturday runs are expected at 221,000 head.

	BULL SIDE		BEAR SIDE
1)	Growing expectations of steady-to-higher cash cattle trade at the end of the week is helping to firm feeders resolve as they hold out for higher money during the week. The expectations of supply tightness developing over the next six to eight weeks is helping to put a longer-term focus back into the cash cattle market.	1)	Beef demand still remains the most uncertain factor in the cattle and beef markets with looming uncertainty of economic growth and reports of increased COVID numbers once again creating concerns of significant gains in the food service industry through the end of the year.
2)	Firm midweek gains in all live cattle futures helped to spark additional underlying support in the complex. This moved December contracts above short-term support levels of $111 per cwt, helping to focus on potential end-of-year buyer support in the cattle complex.	2)	Lack of aggressive price moves in boxed beef values may limit the short-term gains of cash cattle prices. This could cause cash values to stabilize through late September and early October despite expected tighter supplies as packers focus on maintaining longer-term margins.
3)	Continued support in cash hog values is developing. This is not only creating firm support as packers remain aggressive in sourcing hogs, but the previous discount in cash values compared to futures prices is quickly narrowing during late September.	3)	Lack of strong support in deferred lean hog futures trade is creating some concern that widespread export sales may not be as easily attained as previously thought. Traders will continue to focus on the ability to move additional pork supplies to China and other Asian trading partners, with the morning Export Sales report being the first real indicator of activity following African swine fever in Germany.
4)	Traders are anxiously waiting a combination of hog reports, which could spark bullish market moves in the hog complex. A strong week of pork exports last week combined with lower farrowing intentions may give a boost to short- and long-term fundamentals.	4)	Traders expect firm reductions in hogs kept for breeding and lower farrowing intentions over the next year. If these reductions are not seen in the afternoon release of the quarterly Hogs and Pigs report, firm pressure may quickly develop in most 2021 contract months.