GENERAL COMMENTS:
Cattle futures tipped back Wednesday as traders seemed uninterested in attempting to guess what cash will do this week. There were some very limited sales in Iowa at steady prices, but the volume was so light traders could not determine what the week would bring. I think cash will trade Thursday rather than delaying it until Friday with the upcoming Labor Day weekend and the proverbial end of summer. Slaughter will be lighter next week due to one less day, which may result in packers being less aggressive. Boxed beef prices were mixed with choice up $0.75 and select down $0.15. The market may be heading into a period of slower demand and seasonally weaker boxed beef prices, which is what futures may be reflecting. Weekly export sales will be released Thursday morning and may have some influence on the trade; but it is better viewed in the larger picture of demand and not the immediate. Thursday is the last trading day for August live cattle and August feeder cattle.
Hogs were a surprise Wednesday seemingly unconcerned over the weakness of cash and cutouts Tuesday. The National Direct Afternoon Hog report showed cash down $0.86 with a weighted average of $80.55. This would suggest lower cash might take place Thursday with packers purchasing what they need with the upcoming holiday impacting slaughter numbers. Saturday slaughter through yesterday was estimated at no hogs with plants being dark. However, one packer has had mechanical problems this week, which may result in some catch-up on Saturday. That should be confirmed today. No cutouts values were released Wednesday due to packer submission issues with those prices to be released Thursday morning. It will be interesting to see what they show, which could have an influence on trading. Weekly export sales may also have some influence.
| BULL SIDE | BEAR SIDE | ||
| 1) | Bids at steady prices for cattle in some areas were passed Wednesday as feedlots want to see some benefit for their efforts. |
1) | The cattle complex could not garner support from weaker corn prices as traders are more focused on cash and the potential for seasonal boxed beef weakness despite tighter numbers. |
| 2) | Packers did not get many cattle purchased ahead last week for deferred delivery, which may require them to be a little more aggressive this week. |
2) | Live cattle closed below the 40-day moving average again, which could increase technical selling. |
| 3) | Hogs moved above technical resistance Wednesday, which could result in some follow-through today as further short covering takes place. |
3) | Cash hogs and pork cutouts have been under substantial pressure with packers able to purchase what they need without difficulty. |
| 4) | Packers may be more aggressive Thursday in their quest to purchase hogs ahead of the weekend instead of waiting until Friday to finish purchases. This could support cash. |
4) | The strength Wednesday was technically driven, lacking fundamental support. Futures may fall back if cash and cutouts do not show substantial strength Thursday. |
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