Thursday Morning Livestock Market Update - Limited Cash Trade Anticipated

GENERAL COMMENTS:

Traders were searching for solid direction in live cattle but did not find anything to move the market one way or the other, resulting in a mixed close. There is strong anticipation of higher cash this week, but traders are being cautious. Packers might be in a better position to hang tough and pay no more than steady money, leaving it up to feedlots to either take it or pass. The last few weeks have pushed business into the end of the week before most of the business was done. Asking prices are few and far between as feedlots hope for support from boxed beef, export sales, and higher futures. Boxed beef was mixed Wednesday with choice down $0.88 and select up $2.26. Feeder cattle did not react as much to the lower corn prices as one would have anticipated. The market may be getting a little tired at the current level with trade remaining choppy.

Hog futures were under substantial pressure Wednesday but recovered from the selling pressure to close moderately lower. After it looked like packers were still looking aggressively for hogs, traders become more aggressive buyers. The National Direct Afternoon report showed a gain of $0.58. There is uncertainty whether packers will need to remain aggressive Thursday, which may keep futures from pushing higher. Cutouts were weaker with a decline of $0.31. Weekly export sales may have some influence on the market. A group of producers in the Midwest has filed a lawsuit challenging the constitutionality of the Massachusetts Question 3 law that has been put on hold until Aug. 23. Saturday slaughter is estimated at 82,000 head.

	BULL SIDE		BEAR SIDE
1)	Demand for beef continues to hold well despite higher food prices. Packers will need to meet that demand even though margins are tighter.	1)	Traders seem to be anticipating no better than steady cash cattle to trade this week. That may keep upside potential limited as cattle futures have corrected from being overbought.
2)	Feedlots are not in a hurry to move cattle and have posted limited offers so far. Packers have yet to release any bids.	2)	Cattle futures may be looking to trade in a sideways range as demand may have reached a plateau for the time being.
3)	Hog futures had a nice rebound from the lows Wednesday as cash remained higher yesterday. Packers may need to purchase more to fill out the week.	3)	Hog weights increased 0.6 pounds from the previous week to an average weight of 278.5 pounds. This is 1.8 pounds higher than a year ago.
4)	Hot weather is having an impact on weight gain and hog movement, which may provide some support to the market.	4)	A lawsuit against the constitutionality of Questions 3 and the uncertainty surrounding the outcome and the possibility of its implementation and that of Prop 12 may leave upside price potential limited.