GENERAL COMMENTS:
It was anticipated cash cattle would trade higher and that is what unfolded. Southern cattle traded mostly steady with higher trade possible today as some feedlots passed on those bids holding for higher cash. Northern dressed cattle were $3.00 to $4.00 higher. Packers are finding feedlots have a strong resolve to settle for nothing less than steady cash. This did not impact futures as would have been expected. Traders seem reluctant to push futures above contract highs over concern of slowing demand into next year. Boxed beef was lower with choice down $1.31 and select down $0.01. Feeder cattle futures found support from strong prices being seen at auctions.
Hog futures exploded higher as the path of least resistance was to the upside. Contracts regained all the losses of earlier in the week with the price increase mirroring the decline on Monday. There has been no particular change of fundamentals. The National Direct Afternoon Hog report showed a cash decline of $0.80. Cutouts again struggled posting a loss of $0.81. Weekly export sales were disappointing and about half of what they were last week at 20,100 MT. Slaughter remains strong with Saturday slaughter estimated at 132,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Steady to higher cash cattle should provide support under the market with the potential to challenge and exceed contract highs. | 1) | Live cattle have been unable to move to and above contract highs. This may be strong resistance as traders remain uncertain over long-term demand. |
| 2) | Demand has been strong even though food prices have increased. Consumers continue to prefer beef and are willing to pay for it. | 2) | Futures were unable to find strength despite gains in the cash market. |
| 3) | Hog futures regaining the losses of the week and moving back into the trading range indicates earlier weakness was a knee-jerk reaction to outside market news. | 3) | Hog futures were propelled higher by stops being triggered and renewed optimism over demand. However, cash and cutouts did not support the move. |
| 4) | Hog weights increased 0.7 pounds last week averaging 285.1 but remain 5.7 pounds below a year ago. | 4) | Hog slaughter pace is running strong but lower cutout prices are needed to move product which may limit upside potential. |
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