GENERAL COMMENTS:
Traders seemed to be confident of the Cattle on Feed report being somewhat bullish. The bottom line is that the report ended up being neutral for the most part. On Feed numbers were near where they were expected at 100%. Placements at 104% were somewhat bearish with the trade expecting 103.4% However, this was offset by Marketings at 105% of a year ago compared to the estimate of 104.4%. Traders may take their pick of which way they want to go with the market, but sellers may get the upper hand due to the large increase of futures on Thursday that now does not seem necessary. Futures may have been overdone to the upside. Feedlots will want a repeat of last week and will attempt to hold out for higher cash after being able to reverse lower cash earlier last week. They hope packers will need cattle and will buy at no less than steady cash. Some support will come from higher boxed beef prices with choice gaining $1.08 and select up $2.12.
Traders were more cautious in hog futures on Thursday, uncertain of what the Hogs & Pigs report might reveal. With the report being neutral to friendly, there is a strong possibility of aggressive buying of futures Monday. All Hogs totaled 74.201 million head, down 4% from a year ago. Hogs kept for marketing was also down 4% at 68,821 million head, indicating numbers may finally tighten as had been anticipated for quite some time. Hogs kept for breeding was as anticipated, providing no surprise. Cash did not support the market as the National Direct Afternoon report was down $0.56. However, the large increase of cutouts on Thursday of $6.80 coupled with the slightly bullish report, should move futures higher.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cash cattle came back last week to close steady. Feedlots will hold for no worse than steady cash this week and hopefully more. |
1) | Cattle futures may set back due to the Cattle of Feed report not being as bullish as expected. Futures may have moved too high last week and need to correct. |
| 2) | Cattle futures broke out of the downtrend, which might generate greater buying interest from technical traders. | 2) | Even though boxed beef was higher on Thursday, prices have been declining and the trend is down. |
| 3) | The friendly Hogs & Pigs report could generate aggressive buying interest as traders look ahead to tighter supplies. | 3) | Hog supplies may tighten over time, but there still are plentiful supplies available at the present time. |
| 4) | Packers may be aggressive buyers Monday to get an early start on purchasing for the week. Cash may be higher as market sentiment may be changing. | 4) | Packers may not be aggressive this week as it is still in a holiday period with slaughter not running at full capacity. |
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