Friday Morning Livestock Market Update - Active Cash Cattle Trade To Develop

GENERAL COMMENTS:

The consensus for higher cash cattle trade pushed futures higher Wednesday and may see further follow-through Friday. Thinner holiday trade may exaggerate price movement, but higher cash should further support futures. The packers put out bids Wednesday but feedlots let those bids sit with higher offers posted. Feedlots know packers will need cattle and will not settle for less. Boxed beef prices closed lower Wednesday, which may be just normal market business. However, beef demand may slow with the July 4th holiday in the rearview mirror. Boxed beef Wednesday closed lower with choice down $0.55 and select down $2.10. Feeder cattle are near technical resistance and a close above that level could trigger increased buying interest.

Hog futures struggled Wednesday with spread trading continuing. There was no support from cash as the National Direct Afternoon Hog report showed a decline of $0.68 with a weighted average price of $90.97. Cutouts were lower with a decrease of $0.69. Traders continue to search for something to provide solid support under the market but have been unable to find any technical or fundamental consistency. Saturday slaughter is estimated at 158,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash cattle are expected to trade higher as feedlots leave current packer bids on the table.	1)	The July 4th holiday is behind us and retail beef demand may slow as the summer progresses. Hot weather is forecast in a large area of the country, which typically impacts demand.
2)	Cattle supplies are tight and will remain that way for the rest of the year. Higher beef prices have not reduced demand.	2)	Cattle futures may have difficulty breaking through overhead technical price resistance unless cash continues to improve.
3)	Hog futures have held support even though fund traders have been actively liquidating long positions.	3)	Hog futures have uncovered sufficient buying interest for the market to retrace. Futures continue to bounce around near the lows.
4)	The packers have been actively purchasing hogs to maintain a strong slaughter pace. Demand has been absorbing increased pork supplies.	4)	Hog weights remain 7.7 pounds above a year ago, averaging 284.4 pounds. This leaves a plentiful supply of pork available to the market.