Thursday Morning Livestock Market Update - Cash Cattle Trade Expected Today

GENERAL COMMENTS:

Cash cattle trade did not surface Wednesday even though some business took place on Tuesday. It is uncertain whether the few cattle that traded $1.00 lower on Tuesday had set the stage for the rest of the week. Cash activity is likely to surface Thursday. Feedlots may not want to hold out until the last minute and then find out they may need to hold market-ready cattle over another week. The pressure continued on boxed beef prices Wednesday with choice down $0.53 and select down $2.70. The continued weakness of boxed beef may leave packers unwilling to bid higher for cattle. Feeder cattle futures eliminated Tuesday's gains and contracts were unable to find support

Hog futures continue to grind higher with the August contract closing at the highest level since June 4 and later contracts at the highest level in a little over a month. Further gains are expected as both cash and cutouts continue to show strength. The National Direct Afternoon Hog report showed cash up $0.95. It is unusual to see cash hogs trade higher on a Wednesday. The packers may be less aggressive Thursday as they may have sufficient supply purchased for the week. Pork cutouts showed further strength, posting a gain of $1.26. The uptrend may remain intact if there is a good weekly export sales report Thursday,

	BULL SIDE		BEAR SIDE
1)	Cattle futures have maintained a sideways pattern, even though boxed beef prices have been eroding over the past few weeks. Demand is expected to hold and increase over time.	1)	Cattle futures are struggling to maintain support due to the continued weakness of boxed beef prices. Consumer demand for beef is good, but not good enough.
2)	Cattle supplies are tight and are expected to remain that way into next year. The current futures contracts are reflecting that.	2)	If cash cattle trade lower this week, futures could break below the sideways trading range and trigger long liquidation.
3)	Hog futures continue to increase, supported by cash and cutouts. Demand for pork has improved, resulting in packers being more aggressive.	3)	The rebound of hog futures may have been too aggressive and may run out of steam shortly with the market finding a level of balance with fundamentals.
4)	The weekly hog weights declined 1.1 pounds last week to an average of 283.6 pounds.	4)	Hog weights remain 5.1 pounds higher than a year ago, keeping plenty of pork available. Packers have sufficient supply available to satisfy the strong slaughter pace.