Friday Morning Livestock Market Update - Further Selling Likely Ahead of the Weekend

GENERAL COMMENTS:

Traders sold futures in part because of the news circulating of the discovery of Anthrax in Wyoming. This was the first confirmed infection in cattle since 1970 in the state. The Wyoming state veterinarian reported 50 cattle had died with more losses possible. It appears to be confined to a localized area. This may not be a problem if contained quickly, but the market reacted negatively to the information. Cash cattle also traded $2.00 lower in both the North and South. The market did not break completely but the pressure might have been enough for further liquidation to continue Friday ahead of the weekend. Boxed beef showed losses in both categories with choice down $0.09 and select down $2.61.

Hog futures closed lower through the July contract with slightly higher prices thereafter. Futures could not hold up under the pressure of lower cash and cutouts. The National Dairy Direct Afternoon Hog report showed cash down $0.83. Cutouts declined $0.42, adding to the negativity. The market remains in an uptrend but stronger fundamental support needs to surface soon or futures may turn lower. Packers may have most of their needs met for the week, leaving them less aggressive Friday.

	BULL SIDE		BEAR SIDE
1)	The knee-jerk reaction to the news of Anthrax circulating in the market may have run its course. It has so far been contained to a local area.	1)	Cash weakness and the uncertainty of the cattle market may keep pressure on futures. Further liquidation may take place ahead of the weekend.
2)	A head-and-shoulders bottom could develop if futures can rebound from Thursday's losses. This could increase technical buying interest.	2)	Lower cash this week keeps a negative tone in the market. Feedlots need to move cattle and packers continue to purchase for deferred delivery.
3)	Hog slaughter continues to run higher than a year ago, indicating strong demand. Hog supplies seem to be current.	3)	Both cash and cutouts have been struggling, which may limit the upside price potential for hog futures.
4)	The weakness of hog futures the past two days may increase the buying interest of traders as the trend remains up. They may be willing to buy the break.	4)	Hog futures may see further selling pressure into the weekend due to futures being overbought technically.