Friday Morning Livestock Market Update - Hogs Steady, Cattle Lower

GENERAL COMMENTS:

Live cattle could be at risk to fall back to the lows as cash trade Friday most likely will be similar to what was already seen this week along with continued weakness of beef prices. Cash cattle trade was quiet Thursday, which pushed the majority of the business to Friday. Packers will be unwilling to pay more than they already have, which has been steady to $1 lower than last week. Cattle weights suggest feedlots are current, but that may not make any difference due to futures weakness and further declines in boxed beef Thursday. Choice cuts declined $1.82 with select cuts down $3.62. Weekly export sales were good at 15,300 metric tons (MT), but that did not carry enough weight to turn futures higher.

Hogs did quite the turnaround Thursday with October leading the charge. Weekly pork exports sales were not as good as hoped at 23,300 MT, down 25% from the previous week. The positive aspect of the report was that China was a buyer. Cutouts were up $0.27 making it the third consecutive day of higher cutout values. October futures continue to hold a large discount to cash when they historically carry a premium at this time of year. This may have been a factor for the sharp gains Thursday along with the market being oversold and in need of a correction. Cash was $1.86 lower on the National Direct Afternoon report. Saturday slaughter is estimated at 166,000 head.

	BULL SIDE		BEAR SIDE
1)	It is Friday and traders may liquidate short positions into the weekend, which may push futures higher.	1)	The rebound from the lows in cattle futures has not been able to hold, leaving the market at risk of falling back.
2)	Cattle remain oversold technically, which may support higher prices as the market corrects.	2)	Continued lower boxed beef prices and cash business pushed back to today, does not bode well for higher prices.
3)	Hog futures should follow through Friday due to the strong gains Thursday as further short-covering could take place.	3)	Hog futures may have corrected to the level at which traders will now wait to see whether fundamentals will support current prices.
4)	Traders seem willing to buy the market due to the oversold condition as well as optimism for increased demand and higher cutouts.	4)	Continued lower cash suggests packers are getting sufficient hogs to meet demand. Tightening supplies have yet to be seen.