GENERAL COMMENTS:
Traders felt enough is enough and decided to buy aggressively on the expectation cash might trade higher this week. Packers are purchasing for a full slaughter week next week and it is already Thursday. Some light trading took place Wednesday in Kansas at $179 and higher than last week. Nebraska had some dressed sales averaging $287.75. There was not enough to get an indication of prices for the week. October live cattle closed at the highest level since Aug. 4 and could potentially test the highs if cash and boxed beef provide the support. However, that was lacking Wednesday as choice declined $1.91 and select declined $1.93. It will be important for further cash sales to take place higher this week or futures will fall back.
Hogs struggled with more of the pressure on the October contract. Cash was higher with the National Direct Afternoon report showing a gain of $0.94, but that was not enough to stem the selling. If the recent pattern holds, October might trade higher Thursday, reversing some of the losses as that has been a pattern recently. It will depend what traders will focus on today. Cutouts were lower Wednesday, posting a decline of $0.54. Packers need more hogs to round out the week of purchases, which may result in higher cash. African swine fever has been discovered in Sweden for the first time ever. It was discovered in a dead wild boar with personnel scrambling to determine how it was spread. Saturday slaughter is expected at 344,000 head as packers want to make up for being dark on Monday. That is the highest Saturday slaughter I recall seeing.
| BULL SIDE | BEAR SIDE | ||
| 1) | The gains Wednesday in cattle futures could move nearby months back to contract highs again as traders remain confident prices will hold. |
1) | If the rally of cattle futures is not supported by cash, the market will come back down again. Feedlots may want to sell rather than hold cattle over another week. |
| 2) | April and later live cattle futures established new contract highs Wednesday as there is growing optimism over demand. Cattle numbers will remain tight throughout next year. |
2) | Even though cattle numbers are expected to remain tight for some time, higher beef prices may reduce demand if inflation concerns increase. |
| 3) | Packers will need more hogs and it is already Thursday. They should remain aggressive in the cash market. |
3) | Hogs have not been able to find consistent positive fundamentals to provide support under the market. |
| 4) | A high volume of slaughter slated for Saturday is needed to satisfy demand. This will keep hogs from backing up in the country. |
4) | The erratic nature of the market leaves traders scalping with short-term trading rather than taking long-term positions. This keeps the market choppy |
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