GENERAL COMMENTS:
Cattle futures opened slightly lower and declined throughout the day as lower cash cattle trade developed following Wednesday's pattern. Cash trade developed in the South at $3 lower with dressed trade in the North continuing $4 lower. This strikes a blow to the complex as it increases the difficulty for the market to find strong buyer interest. The focus today will be the Cattle of Feed report that will be released after the close. The concern for traders is the placement number at 107% with a range of 101% to 108%. The October report is all too fresh in traders' minds and the impact it had on the market. The average estimates for on-feed as of November 1 is 102.1% compared to a year ago. Analysts estimate marketings in October at 98.1%. Boxed beef did not fare well yesterday with choice down $1.61 and select down $0.20. Feeder cattle futures fell in line with live cattle and shared the concern of the report and demand.
Hogs struggled for a time trading in negative territory with traders finally becoming more confident over the market finding support at the current level. Cash trading showed strength with the National Direct Afternoon Hog report showing a gain of $0.91. This does not mean that cash will trend higher, but it does relieve some pressure. Slaughter will be disrupted next week due to Thanksgiving which may limit the aggressiveness of buyers today. Cutouts were down $0.90 which may limit upside price potential today. Saturday slaughter is estimated at 238,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | The placement estimate for the Cattle on Feed report is large at 107% and anything less than that could send the market higher. | 1) | Weekly export sales of beef were not very good at 8,900 mt, down 35% from the previous week. |
| 2) | Cattle numbers are still tight and will remain that way for much of next year. Prices should remain supported even if demand slows a bit. | 2) | There may be bearish implications from the Cattle on Feed report which may not push futures too much lower but may limit upside potential. |
| 3) | Hog futures may move in a sideways range through the holiday which could continue to build technical support. | 3) | Weekly export sales of pork were 51% lower than the previous week at 24,300 mt with China not showing up as a buyer. |
| 4) | Strong hog slaughter continues to keep hogs moving to the market. Demand for pork may improve through the end of the year. | 4) | The short-term trend of futures is lower with lower highs and lower lows over the past two days. Underlying fundamentals are not very supportive at the present time. |
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