Friday Morning Livestock Market Update - Cash Cattle Trade Waits

GENERAL COMMENTS:

Live cattle futures closed near the highs Thursday, but did not see much change from the previous day. Traders seemed to be holding their breath, waiting for cash cattle to trade. However, it was another day of very little activity. Feedlots held higher asking prices as packer bids were shunned. Packers in the North purchased a few cattle $3.00 to $5.00 higher Thursday on a dressed basis while little else was done. Business will be accomplished Friday, and it will be interesting which side will blink first. Boxed beef did not fare well Thursday with choice down $4.07 and select down $0.92. Weekly export sales were not good at only 9,900 metric tons (mt), down 42% from the previous week. There is solid demand for feeder cattle but higher corn prices Thursday turned traders into aggressive sellers.

Hogs held well Thursday, gaining back part of the decline suffered the previous day. Monday is the last day to trade the July contract. August will take over as the front month and is currently carrying a $6.00 discount. The National Direct Afternoon Hog report showed cash up $0.78. The CME Lean Hog Index moved up $0.70 to $99.36. Cutouts were able to gain $0.24, indicating continued good demand. Weekly exports of pork were not bad with sales down 6% from the previous week totaling 24,500 mt. Packers are not expected to be aggressive Friday, which may keep gains in futures limited. Saturday slaughter is estimated at 33,000 head.

	BULL SIDE		BEAR SIDE
1)	Feedlots have been passing on packer bids and seem to be willing to hold for no less than steady prices, even if it means holding cattle another week.	1)	Continued weakness of boxed beef and lower export sales may have a negative influence on cattle prices over time.
2)	Demand for feeder cattle remains strong in anticipation of higher beef prices remaining the rest of the year and beyond.	2)	Higher corn overnight might keep pressure on feeder cattle as traders trade the correlation.
3)	Hogs showed higher cash so far this week as packers continued to purchase hogs to keep slaughter pace and meet demand. Strong cutouts provided support.	3)	Packers are not expected to be aggressively looking for hogs Friday, which may limit further gains in hog futures ahead of the weekend.
4)	Hog futures seem to be consolidating and may be poised to move higher as hog supply seems to be tightening.	4)	Hog weights gained 1.1 pounds this week to an average of 277.8 pounds when usually they decrease in the summer.