Friday Morning Livestock Market Update - Further Strength Into The Weekend

GENERAL COMMENTS:

Cattle futures finally bounced Thursday as the market has lower cash this week factored in. The strength was technical and limited as support did not come from exports, cash, or boxed beef. More cash cattle traded, averaging $4.00 lower in the South and $2.00 lower for Northern dressed cattle. Feedlots needed to move cattle and packers were unwilling to pay for them. Higher prices may have impacted international demand as export sales were at a marketing year low of only 8,300 metric tons. Boxed beef prices continued their weakness with choice down $2.40 and select down $0.56. If the weakness of boxed beef continues, cattle prices may be lower next week. Demand is following the seasonal decline. The WASDE report will be released Friday at 11 a.m. CDT.

Hog futures finally found a level at which some short-covering was triggered. The strength was confined to the August and October contracts with slight gains in others. Thursday's action was technical with possible short-covering Friday ahead of the weekend. Pork cutouts up $1.81 may provide strength Friday, but not long-term impact unless they trend higher consistently. The National Direct Afternoon Hog report showed cash down $0.54. Cash hogs may trade higher Friday as packers finish this week's purchases. The weekly export sales at 26,500 metric tons, down 55% from the previous week, indicate international demand has not improved with lower prices. Saturday slaughter is estimated at 27,000 head.

	BULL SIDE		BEAR SIDE
1)	Live cattle held trendline support, keeping the overall uptrend intact.	1)	Boxed beef prices continue to show weakness, indicating demand is slowing. This will impact cash prices in the near term.
2)	Slower beef demand is expected to be seasonal and temporary. The market should remain strong with tight cattle supplies for the rest of the year.	2)	Feedlots have cattle that need to move to the market and weights are higher. This puts more beef on the market with fewer cattle.
3)	Hog futures seem overdone to the downside with the market extremely oversold. A price retracement should take place at some point.	3)	Lower pork export sales indicate lower prices are not stimulating international demand.
4)	The July hog contract goes off the board Monday with August taking over as the front month. It currently holds a discount of about $2.00 which may provide support.	4)	Pork cutouts continue to fluctuate providing no solid support to the market. Lower pork prices have not stimulated sufficient demand to absorb the higher slaughter pace.