Friday Morning Livestock Market Update - Profit-Taking May Surface Ahead of Weekend

GENERAL COMMENTS:

Cash cattle traded $2.00 lower for the both the Northern dressed cattle and Southern live cattle. Business is basically done for the week. Traders will turn their attention to the potential for cash prices next week, which may leave futures trading mixed Friday. Boxed beef prices were mixed with choice down $0.77 and select up $0.72. Feeder cattle have moved back to the highest level since May 10. There has been aggressive buying in feeder cattle auctions this week. Tighter supplies of calves and feeder cattle may be showing up, which may impact cattle prices later this year. Weekly export sales will be released Friday morning.

It was a little surprising hogs backed off from their highs Thursday due to another strong day of cutouts. Futures closed moderately higher with July showing a slight decline. The National Direct Afternoon hog report showed cash down $0.46. However, cutout gained $2.00, extending the gains already seen this week. Demand is good as retail buyers are coming back for more product. Packers likely have the majority of their hogs purchased for the week, but I would not be surprised if cash might close steady to higher as they need to already focus on next week. USDA's Weekly Export Sales and Shipments report will be released Friday with hopes for strong international interest. Saturday slaughter is estimated at 148,000 head.

	BULL SIDE		BEAR SIDE
1)	Live cattle have a chart gap quite a bit higher that remains from the April Cattle on Feed report.	1)	Live cattle futures have rallied without support from cash or boxed beef, but from technical buying. This may run its course Friday, resulting in weakness.
2)	The decline of corn prices this week and lower steer carcass weights should provide some room for feedlots to hold for steady to higher prices next week.	2)	There are a lot of cattle that will be available to the market over the next weeks. Packers know it and will be unwilling to increase what they pay for them.
3)	Pork cutouts have shown significant strength this week, which should continue to underpin the market.	3)	Hogs could not hold their early strong gains Thursday, which could indicate traders may not think the upside price potential is limited. The strength of cutouts may slow after retail has restocked.
4)	Packers have been aggressive, which may indicate strong demand from both domestic and international markets.	4)	Cash may be lower Friday as packers have already purchased quite a few hogs this week.