Thursday Morning Livestock Market Update - Traders Wait For Cash

GENERAL COMMENTS:

It is interesting that even though the idea is that packers are short bought due to a low volume of cattle being purchased last week, packers have not yet stepped up to the plate. One would think they would have been more aggressive earlier in the week. There have not been any solid bids or offers posted. If there is no cash trade Thursday, it will get very interesting on Friday. Outside pressure from the downgrading of the U.S. debt rating likely had some spillover impact on the market, but that may have been a correlated reaction and not an overall concern. Boxed beef prices declined with choice down $2.92 and select down $2.13. Feeder cattle futures removed much of the gains from Tuesday. Some of the buying exuberance has been tempered lately in part because of the hot weather that has been experienced.

Morning cash hog and cutout weakness pointed to lower prices for Wednesday. This put some pressure on hog futures, pushing futures lower with the greatest losses in the nearby months. The National Direct Afternoon Hog report showed cash down $2.13 for the day with cutouts down $3.63. Hog weights declined last week, which should provide some support as it may indicate marketings are current. It also means more hogs are needed for the required tonnage to fill demand. Some pressure could have come from the outside markets with the U.S. dollar in a strong uptrend over the past three weeks. Weekly export sales will be released Thursday.

	BULL SIDE		BEAR SIDE
1)	Feedlots are again determined to hold out for better prices this week as they anticipate packers will need to purchase cattle due to light cash trade last week.	1)	Feedlots have been holding cattle over, hoping for higher prices. They may need to move those cattle this week, which could mean lower bids from packers may be accepted.
2)	The outside market influence that played a part in the weakness of cattle futures Wednesday was likely a knee-jerk reaction and will be factored in with possible higher futures Thursday.	2)	Boxed beef continues to remain under pressure with packer margins tight. Slaughter pace is being reduced.
3)	Hog weights declined 1.7 pounds last week to an average of 276.8 pounds. More hogs are needed to fulfill the tonnage requirements.	3)	August hog futures came close to closing the chart gap from last week but did not get it accomplished. A lower price Thursday may accomplish the task.
4)	Even with the weakness of hog futures, the uptrend remains intact in nearby contracts.	4)	Cash hogs will likely be lower again Thursday as packers may have purchased much of what they need for the week.