Friday Morning Livestock Market Update - Traders Wait For Northern Dressed Trade

GENERAL COMMENTS:

Traders were surprised at Southern cattle trading $2.00 higher Thursday. The consensus had been that cash would be no better than steady this week. The weakness of boxed beef again this week and some cattle that were already purchased ahead did not impact cash business Thursday. Northern dressed trade will be the key to whether live cattle futures will see further strength Friday. Futures have already adjusted to the higher cash. Weekly export sales of 13,400 metric tons (mt) were lower than the previous week. The June Cold Storage report did not show any large change in inventory, leaving the report neutral to the market. Boxed beef prices were mixed with choice down $0.22 and select up $1.15. Feeder cattle followed the lead of live cattle but without much conviction. Feeder cattle auction prices have been variable.

Hog futures took a breather Thursday after initially pushing higher. Optimism remains in the market as demand has improved. Cutouts increased $1.19, supported by the increase in butts of $6.48. The supply of pork bellies in cold storage in June was 14% lower than in June 2023. Total pork in cold storage was 3% below a year ago. The report was neutral to the market. Weekly export sales were stronger with an increase of 28% from the previous week. The National Direct Afternoon Hog report showed a decline of $0.79 after buyers had been aggressive earlier in the week. Cash is expected to be lower Friday as clean-up purchases will take place.

	BULL SIDE		BEAR SIDE
1)	The $2.00 higher cash cattle trade in the South should provide more support to the market. Northern dressed trade may follow suit.	1)	Live cattle futures carry no premium to cash and will rise and fall accordingly. This is unusual and indicates the caution held by traders.
2)	August live cattle futures have moved closely with cash and should remain supported. The August, October, and December futures only vary by $0.30, leaving the rest of the year close to the current cash price.	2)	The recent weakness of boxed beef is expected to continue as the summer progresses and lackluster demand continues.
3)	Hog futures made another high Thursday, keeping the uptrend intact. A price correction is beneficial to a trending market.	3)	Hog futures have had a substantial run higher and may see a price correction at the end of the week.
4)	Pork cutouts have been strong, indicating demand is good. Hog buyers have been more aggressive with their purchases to keep plants running full.	4)	The August and October hog contracts have a chart gap below the market that may be filled on a price retracement. Chart gaps generally are filled before the end of the contract.