Friday Morning Livestock Market Update - Selling Pressure May Subside

GENERAL COMMENTS:

Live cattle futures opened higher but fell back from there throughout the rest of Thursday. Cash cattle traded lower with Southern live cattle $2.00 lower than last week and Northern dressed cattle $4.00 to $5.00 lower. Cattle futures had much of this decline factored in, but further pressure was seen as further liquidation surfaced. The October live cattle contract posted the lowest close since May 13 while the December posted the lowest close since Dec. 11, 2023. This certainly does not bode well for the market. There is concern the market could follow the pattern traveled in March. Boxed beef showed continued weakness with choice down $1.73 and select down $0.80. Further cash trade Friday will follow the same as Thursday with feedlots having to decide to sell or hold for another week.

Hog futures were negative at the beginning of trading Thursday as prices gapped lower. Fortunately, the selling ran its course with futures bouncing from the lows. The negative reaction was spurred by the recent weakness of cutouts and the fear of weaker demand. Cutouts declined $0.73 on Thursday. The National Direct Afternoon Hog report showed cash down $1.05 with the packers having purchased much of their weekly needs. Weekly export sales were good at 34,600 metric tons (mt) but provided no solid support to the market. Futures fell below the trading range, setting a negative tone. Saturday slaughter is estimated at 85,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle futures have lower cash already factored in, limiting further downside pressure. Some short-covering could take place ahead of the weekend.	1)	Live cattle contracts are near another level of support. If that does not hold, futures could follow a similar pattern seen in March and further weakness.
2)	Cattle supplies remain tight, which may increase the interest of traders to buy the break for the long term.	2)	The weakness of boxed beef will keep upside price potential limited and packers less aggressive.
3)	Hog futures left chart gaps Thursday. Gaps are generally filled at some point during the life of the contract.	3)	Hog futures moved below the recent sideways trading range which may result in further technical pressure in the market.
4)	Good export sales indicate international demand is solid and lower prices are attractive to international buyers. This will keep pork moving and improve cash prices.	4)	The weakness of cutouts this week may indicate a decline in demand. Traders anticipate lower prices according to futures contracts.