GENERAL COMMENTS:
Feeder cattle led the complex higher on Thursday posting triple-digit gains across the board. Live cattle struggled a bit more as traders remained cautiously optimistic. Some earlier cash cattle this week traded at $167 live and $267 dressed. Bids were raised to $168 and $268 yesterday but did not get any takers as feedlots are holding for steady cash. Export sales, being better than the previous week at 10,600 MT provided some support yesterday, but it was not enough to turn packers more aggressive yesterday. Boxed beef prices will not get them excited with Choice down $1.14 and select up $0.55. The overall weaker trend of boxed beef is cause for concern. Even though live cattle futures gained on Thursday, traders are waiting for confirmation of cash price activity.
Hog futures pushed higher with February leading the charge, taking over the front-month spot with a bang. This was interesting as cash did not look promising in the morning report. The National Direct Afternoon Hog report showed a decline of $0.44 to a weighted average of $49.21. The strength seemed to stem from the weekly export sales report which showed sales at 28,200 MT which was 9% above the previous week. It may take more than that to turn the trend higher as cutouts showed a loss of $0.36 yesterday as overall demand remains lackluster. Some follow through strength may begin the day, but strength may wane as the day progresses. Saturday hog slaughter is estimated at 289,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Feedlots seem to be more determined this week to hold out which may result in packers having to raise bids to obtain cattle. | 1) | Live cattle had an inside trading day technically which does not provide solid price direction for today. |
| 2) | Lower cash is already factored into the market allowing for further upside potential if cash trades less than $3.00 lower than last week. Bids are already higher than December futures. | 2) | Feeder cattle may have gained more on emotion and recent price direction rather than fundamental support. This may fade ahead of the weekend. |
| 3) | February hogs made a statement on Thursday with traders believing cash will find a bottom early next year as lower prices will increase demand. | 3) | Weekly hog weights remained the same as the previous week at 290.6 pounds. However, this is still 5.1 pounds higher than a year ago. |
| 4) | Good export sales may indicate international demand may be improving, which would provide more support to the market. | 4) | Upside futures potential may be limited without support from better cash and cutouts. |
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