Friday Morning Livestock Market Update - Cash Cattle Trade May Not Provide Support

GENERAL COMMENTS:

Thursday began on the wrong foot as weekly export sales were low at only 9,200 metric tons (mt, which increased concern over ongoing demand internationally. Cash cattle in the South then traded steady with last week after there were expectations of stronger cash. Northern dressed cattle traded $2.00 higher, but that was not sufficient to offset the disappointment of Southern trade. The market did not fall apart, but it may limit price strength Friday. Boxed beef prices were mixed with choice up $1.71 with select down $0.10. With increased cattle weights, one must wonder whether slaughter pace may soon diminish if evidence is seen of slowing domestic demand.

Hogs closed near unchanged after higher prices dominated a portion of the day. Strong weekly export sales did not provide support on the opening until higher trade unfolded and traders turned optimistic. That did not hold through the end of the day. Weekly export sales were strong at 47,900 mt with China being the second largest buyer of pork. Cash held a cloud over the market with the National Direct Afternoon report showing a loss of $3.36. There has been only one day of stronger cash this week which only showed slight gains. Cutouts showed a minor gain of $0.13. Hog weights decreased 0.1 pound last week and are running 5.6 pounds below a year ago.

	BULL SIDE		BEAR SIDE
1)	Cash cattle traded no worse than steady with last week. Packers held out long enough to not have to bid higher in the South. However, that may not continue due to strong slaughter pace and packers needing to obtain supply.	1)	Cattle futures made a lower low and lower high yesterday, extending the recent downtrend. Steady to higher cash had little impact on the market.
2)	Cattle supplies remain tight, which is not expected to change anytime soon. This should maintain support under the market for the time being.	2)	Poor weekly export sales cast a cloud over international demand. There have been two weeks of disappointing sales.
3)	Declining hog weights at this time of year with weights 5.6 pounds below a year ago suggest marketings are current as hogs are pulled forward.	3)	Hog futures remain in a downtrend with the potential to test chart support about $2.00 lower.
4)	Strong export sales should support the market as international demand remains strong. Higher slaughter is needed to fill both domestic and international demand.	4)	Packers have not been aggressive this week with only one day of higher cash and that was only a minor gain. It is unlikely they will be aggressively bidding for hogs Friday.