Thursday Morning Livestock Market Update - Lower Cash Trade May Limit Upside Potential

GENERAL COMMENTS:

Live cattle struggled into the close Wednesday, but did rebound from the lows established during the day. The cash cattle trade was more active than usual for a Wednesday with trade taking place at lower prices. Southern live cattle traded at $2.00 lower than last week with Northern dressed at $4.00 to $5.00 lower. Feedlots are taking what they can get before prices erode further. Boxed beef prices were slightly higher with choice up $0.13 and select up $0.04. The Cattle on Feed report will be released Friday The average trade estimates are for on-feed numbers on Aug. 1 at 100% of a year ago. Placements in July are estimated at 104%. Marketings are estimated at 108.2%. The marketing number seems high, but there were two extra marketing days than in July 2023.

Hog futures showed minor spread trading activity as there was little for traders to get excited about. The hope for higher cash and cutouts faded as Wednesday progressed. Futures tried to push higher but ran out of steam, taking contracts off their highs. The packers seem to be done buying for the week as the National Daily Direct Afternoon Hog report showed a decline of $1.20. Cutout values fell $2.99, which may add some bearishness to the market Thursday. The packers are not expected to be aggressive the rest of the week.

	BULL SIDE		BEAR SIDE
1)	Cash cattle trade has been established, which may relieve some of the selling pressure. Futures hold a discount to cash.	1)	Cattle futures are struggling and without support from cash, prices could erode further. Cattle weights remain high allowing for less cattle to be purchased to get the required tonnage.
2)	There may be some short-coving ahead of the Cattle on Feed report released after the close Friday. Traders may want to limit their exposure before the report.	2)	Feedlots are willing to move cattle and may do the same next week as holding for higher prices has only resulted in lower prices. They may sell to avoid further price declines.
3)	Hog futures hold a substantial discount to cash and may slowly move higher to narrow the gap.	3)	Packers may be done buying for the week, resulting in less-aggressive buying and lower prices.
4)	A good weekly export sales number is expected, which may provide support under the market.	4)	Hog weights increased this week up by 0.1 pounds to an average of 281.1 pounds compared to 278.3 pounds a year ago.