GENERAL COMMENTS:
It was a negative beginning for cattle but as further cash trading developed, cattle futures turned higher. Northern dressed cattle traded $1 to $2 higher generating interest in purchasing futures. The stage is likely set for cash activity today with Southern cattle likely to trade steady and Northern cattle higher. This was not expected earlier this week and the result of feedlots holding out due to tight supplies. More live cattle and feeder cattle contracts closed their chart gaps before futures turned higher, but later contracts still show gaps from a week ago. Weekly export sales were lower than the previous week and may have limited some possible gains. Boxed beef prices were mixed with choice up $1.18 and select down $0.76.
Hog futures were unable to find support as packers were not aggressive in the cash market. The National Direct Afternoon Hog report showed cash down $2.78 as most of the hogs needed this week had been purchased. Weekly export sales were better than the previous week 28,800 mt, but that failed to provide support to futures. Pork cutouts were up $0.22 showing at least steady retail demand. The selling pressure on Thursday took away most of the gains this week with contracts unable to retest the contract highs. Futures may trade mixed ahead of the weekend.
| BULL SIDE | BEAR SIDE | ||
| 1) | More cattle contracts were able to close the chart gaps that had been below the market giving technical traders confidence in buying futures. | 1) | The differed contracts in live cattle and feeder cattle futures hold chart gaps below the market that may be filled. |
| 2) | Higher cash cattle trade should improve the price outlook as it indicates demand remains strong and supplies remain tight. | 2) | The news of the potentially more widespread impact of the bird flu virus in dairy cattle than what has been reported may keep traders cautious and upside potential limited. |
| 3) | Packers may be generally done buying for the week but pork demand remains strong and slaughter continues to run higher than a year ago. Hog weights declined by one pound from the previous week's average of 287 pounds. | 3) | The failure of hog futures to retest the contract highs may keep futures in a wide sideways trading pattern. |
| 4) | A drop in hog futures may be viewed as a buying opportunity by traders as funds seem willing to buy the break due to positive fundamentals. | 4) | Lower export sales in the past two weeks may indicate international interest has declined due to higher pork prices. This may be a limited factor of price potential. |
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