Thursday Morning Livestock Market Update - Trading Activity Shows Uncertainty

GENERAL COMMENTS:

Some cattle traded Wednesday at steady cash. This likely set the direction for the rest of the week. With cash looking to be no worse than steady, traders were aggressively buying futures as the unknown is now known. Even though cash was steady, and futures closed higher, boxed beef may be in trouble with choice down $1.27 and select down $0.41. Demand may be slowing as feared due to high food prices. The Cattle on Feed report will be released Friday. The average estimate for cattle on feed is 98.3%. Placements are estimated at 96.3% and marketings at 100.8%. This would be positive for the market. However, it will make a difference on which side of these estimates, the actual numbers fall. Weekly exports sales may have some impact and will need to be better than they have been to generate strong trader interest. Feeder cattle should find some support due to overnight corn weakness.

Hog futures just could not find solid direction. The National Direct Afternoon Hog report did not provide solid support, even though cash was up $0.61. Packers had to pay up but were able to purchase hogs without having to be very aggressive. Cash is expected lower today. Cutouts limited futures gains with price down $2.07. Strong slaughter continues to put plentiful supplies of pork on the market, requiring lower prices to move product. Weekly export sales will need to be good, or futures could falter. Hog weights increased 0.3 pounds last week to average 283.8 pounds per animal. Weights remain 6.5 pounds below a year ago. Saturday hog slaughter is estimated at 167,000.

	BULL SIDE		BEAR SIDE
1)	Steady cash should keep futures supported. Packers will need to purchase to keep ahead of the strong slaughter pace.	1)	Steady cash cattle trade may leave futures in a range. Packers may attempt to purchase a higher volume of cattle for deferred delivery.
2)	Significantly lower corn futures overnight should support feeder cattle.	2)	If weekly export sales are disappointing, traders may sell more aggressively as beef could back up in the domestic market.
3)	Hog futures are trending higher with most contracts making higher highs and higher lows again as has been the pattern of the past four days. The August contract made a new high.	3)	Pork cutouts continue to show weakness as lower prices are needed to stimulate demand and keep product moving.
4)	Hog slaughter remains very strong with weights significantly below a year ago. This keeps marketing current.	4)	If weekly export sales are disappointing, more aggressive selling by traders could be triggered through the rest of the week.