GENERAL COMMENTS:
Live cattle futures struggled for a time, but traders found the wherewithal to buy aggressively into the market. It is possible traders are already looking past this week in anticipation cash will need to improve due to continued strength of boxed beef. Packers will not be able to reduce slaughter indefinitely if demand improves. Feedlots hope packers will become more aggressive due to improved margins. Boxed beef was again higher with choice up $0.58 and select up $0.32. Some cattle traded yesterday in Nebraska and Iowa about $2.00 to $3.00 lower than last week. No other trade has been done with the activity today likely following the lead so far. Weekly exports sales were 25% lower than the previous week totaling 11,400 mt. Feeder cattle found support as traders kept pace with live cattle and likely covered some short positions that had profit ahead of the weekend. Traders are likely trading for the short-term scalping the market due to it moving in a sideways pattern.
Hogs may be following a similar pattern to last week with short covering ahead of the weekend. If so, further strength should be seen today. This is likely due to very strong cutouts yesterday posting a gain of $4.13. The only category of cutouts showing a decline yesterday was ribs with a decline of $2.48. The National Direct Afternoon Hog report showed further weakness of cash with a decrease of $0.77. Packers are not expected to be aggressive today, but cash could trade slightly higher. Weekly export sales increased 15% from the previous week, totaling 33,000 mt. Saturday slaughter is estimated at 140,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle futures rebounded from technical support keeping the market in its recent sideways trend. Lower cash is already factored into the market. | 1) | Cash cattle seem to be in a slow grind lower. Feedlots need to move some cattle as they will not hold onto them if it does not net any benefits. |
| 2) | The cattle complex continues to be supported by tighter cattle numbers which should limit downside price potential through the end of the year. | 2) | Average steer weights increased to 901 pounds, which is an increase of 6 pounds from the previous week and steady with last year. Cattle are not being pulled ahead as much as they had been, which is increasing tonnage. |
| 3) | The sharp increase of pork cutouts is hopefully an indication of better demand surfacing. Prices have been beaten down sufficiently to increase consumer buying interest. | 3) | The technical increase of hog futures may be difficult to retain if cash and cutouts remain weak. |
| 4) | Good export sales may indicate international demand may increase due to attractive pork prices. | 4) | Hog weights increased 1.l pounds to an average of 278.3 pounds this week. This is 1.8 pounds higher than a year ago. |
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