Thursday Morning Livestock Market Update - Strong Support Remains Elusive

GENERAL COMMENTS:

The livestock complex closed in the red across the board as traders were disappointed in overall market fundamentals. August live cattle broke though and closed below the bottom of the sideways trading range it had been in for about three weeks. Cash cattle traded Wednesday at steady prices of $120 to $122 in the South and $198 in the North. The amount of cattle traded was sufficient to indicate steady prices may be the best that might be received this week. That provided the selling pressure on the market. Boxed beef again resumed weakness after some strength was seen on Tuesday. Choice cuts declined $1.78 while select cuts declined $1.23.

Hog futures were under pressure with maybe some unwinding of the spreads that had been established the day before or traders thought August was just too high and decided to sell. The fact that cash on the National Direct Afternoon report showed an increase of $0.68 and that cutouts gained $2.13 had no influence on traders. The ongoing strike at the Olymel plant in Canada is far from over, which continues to move hogs down to the U.S. for processing, keeping packers in some areas sufficiently supplied. Estimated hog slaughter for Saturday is 57,000 head.

	BULL SIDE		BEAR SIDE
1)	At least cash does not appear it will trade any less than steady this week, which should provide some support to futures.	1)	Live cattle futures are at risk of falling below the sideways trading range they have been in for about three weeks, increasing selling interest.
2)	Lower feed prices should improve profitability to some extent and may keep feedlots from being aggressive sellers in the cash market.	2)	Traders were disappointed cash cattle did not trade higher, prompting the selling of futures amid market uncertainty.
3)	Processing speeds are slower, which could result in less pork being available to consumers thereby increasing prices with strong demand.	3)	Slower processing speeds and sufficient numbers of hogs being available keep the market supplied with pork.
4)	July hog futures were still able to maintain the uptrend despite the decline Wednesday. Futures will need cash and cash may trend higher until it goes off the board next week.	4)	Futures have been unable to maintain the recent price rally and may be in jeopardy of retesting the lows of three weeks ago.