Thursday Morning Livestock Market Update - Markets May Consolidate

GENERAL COMMENTS:

Cattle gained back some of their losses Wednesday but have a long way to go before prices regain the losses of the past week. Traders anticipate feedlots might be able to command a higher price for their cattle this week, but not to the extent of the increase last week. So far, there have been a few cattle traded about steady with last week, but that has not been a solid indicator for the rest of the week. Packers continued to hold their bids at Tuesday's level with limited interest shown by feedlots. Business is expected to be more active Thursday with packers likely forced to pay higher again for cattle. There is concern over continued weakness of boxed beef with choice down $1.46 and select down $2.32. Weekly export sales will be released Thursday morning.

Cash hogs posted a second day of triple-digit gains. The National Direct Afternoon report showed an increase of $1.35. This certainly is something to take note of. Either packers want to purchase hogs more aggressively earlier rather than later due to the holiday period later this month or supplies are finally becoming more current. The hope is for the later, but we will take anything we can get after a long period of cash weakness. Cutouts plummeted $4.33 Wednesday, offsetting the support seen from cash. Weekly export sales may set some direction Thursday morning.

	BULL SIDE		BEAR SIDE
1)	Cattle regained some of their losses as there is anticipation of higher cash developing. Business is being pushed to the latter half of the week as feedlots hold out.	1)	A few cattle traded at even money earlier in the week do not provide a solid indication of cash potential, but it may reduce the expectation of cash potential.
2)	The liquidation phase seems to have run its course with traders now poised to react to cash activity and/or weekly export sales.	2)	Continued weakness of boxed beef may put further pressure on the entire complex, limiting upside price potential.
3)	Hogs have seen higher cash over the past two days. This may indicate market-ready supplies might be tightening.	3)	The sharp decline of cutouts Wednesday offsets the positive increase in cash over the past two days.
4)	Hog futures are consolidating and ready to move in either direction. A strong weekly export sales report could provide traders with the confidence needed to buy into the market.	4)	Hog weights are slightly higher for the week, which provides more pork tonnage available to the market.