Thursday Morning Livestock Market Update - Hog Support Remains Elusive

GENERAL COMMENTS:

Fear and reality seem to be coming together with cash looking to be steady to lower this week. The rebound of corn prices is putting reactionary pressure on the market. Feedlots that have cattle that need to be moved are anxious to sell as the cost of feeding them is rising. Packers are looking at seasonality and potentially slower demand. Boxed beef was mixed with choice up $0.03 and select down $1.18. Nearby feeder cattle closed slightly higher as demand remains strong due to lower availability. Thursday is the last day to trade the August feeder contract.

Hogs just cannot find support. The December contract closed the chart gap easily Wednesday and then continued to fall. October still needs to accomplish that task and a lower opening could finish the job. The National Direct Afternoon report showed a decline of $1.62. This coupled with a decline of $2.09 in cutouts, does not provide much hope for finding support Thursday. It is likely weekly export sales may be meaningless in the current market. Saturday slaughter is estimated at 37,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle have been able to hold well in the face of rising corn prices. Feedlots are looking ahead to better beef prices.	1)	Cash cattle trading $1.00 lower does not bode well for the market in the near term with Labor Day just around the corner.
2)	Liquidation of the cattle herd continues due to drought conditions in some areas. This will impact supply later.	2)	The uptrend line has been penetrated, opening the possibility of a price correction.
3)	Hog futures are oversold and ripe for a bounce. Heavy selling should be near the end as futures near strong technical support.	3)	Hog weights increased nearly a pound this week. Increasing slaughter will leave plentiful product available to the market.
4)	Closing the chart gap in December hogs and potentially closing the October gap today could generate some buying interest. Futures hold a large discount to cash.	4)	October still needs to close the chart gap below the market. This may be accomplished this week as cash and cutouts remain weak.