Thursday Morning Livestock Market Update - Markets Search for Direction

GENERAL COMMENTS:

Live cattle futures are having a difficult time trying to move higher. This week may be difficult anyway due to the Cattle on Feed report to be released Friday. Traders may be more cautious about this report due to the wide estimates for placements. Placements are estimated at 101.6% with a range of estimates from 95.9% to 104.8%. Cattle on feed as of Oct. 1 is estimated at 99.8% of a year ago. Marketed in September is estimated at 90.3%. Cash has yet to develop sufficiently for any trend to be established with a few more cattle traded in Iowa Wednesday. Boxed feed closed lower after a few days of strength. Choice declined $1.28 with select down $0.28. Weekly export sales Thursday morning will hopefully be better than last week. Feeder cattle may test the recent lows. A break below that level could trigger further selling pressure.

Hog futures did not do much Wednesday with a price swing of less than $1.00 and prices closing mixed. December and February were slightly higher, while later contracts were slightly lower. Higher cash for midweek was a bit of a surprise with the National Direct Afternoon Hog report showing a gain of $0.46. However, cutouts offset the cash with a loss of $1.60. The December and April contracts tested the lows, while February set a new low before rebounding. The market is struggling technically. Saturday slaughter is estimated at 205,000 head.

	BULL SIDE		BEAR SIDE
1)	Feedlots may hold out this week until the end as they want to see the numbers from the Cattle on Feed report before selling cattle.	1)	Cattle futures are having a difficult time retracing the losses as the market seems to have topped and is now trying to establish some balance. This may limit upside.
2)	Feeder cattle should find some support as the cattle herd will take some time to rebuild, keeping numbers tight for a while.	2)	There may be some liquidation pressure ahead of the Cattle on Feed report as traders are uncertain over placements.
3)	There has been a lot of bearishness thrown at the hog market with the market possibly finding some support near the lows.	3)	Hog weights have increased significantly with the average weight last week at 283.5 pounds, an increase of 1.6 pounds from the previous week. This compares to 282.8 pounds a year ago.
4)	Reduced hog slaughter may be more a matter of lower hog numbers rather than packers improving margins.	4)	Hog futures are flirting with contract lows and a break below that level could increase technical selling.