Thursday Morning Livestock Market Update - Cash Cattle Are Expected to Trade

GENERAL COMMENTS:

Traders turned cautious over the cash potential this week. No cash cattle has yet taken place. The packers and feedlots have not indicated who will be more aggressive this week. Cash is expected to trade Thursday with a growing idea it may be steady with last week. The packers have been purchasing cattle ahead, leaving them potentially less aggressive this week. Boxed beef prices were mixed Wednesday, leaving traders uncertain over demand potential. Choice cuts were up $0.93 while select cuts were down $0.72. Feeder cattle futures did not provide support, eliminating the gains of Tuesday and keeping futures entrenched in a sideways pattern.

Hog futures made new highs Wednesday, only to fall back from those highs in the October through February contracts as spread trading was active. The December contract showed the brunt of the selling as the market is overbought technically and both cash and cutouts did not show strength. Cutouts fell significantly, showing a loss of $3.53. The National Direact Afternoon Hog report showed cash down $0.23 with a substantial volume of hogs traded. Packers were able to purchase without having to be aggressive. The weekly hog weights declined to 280.7 pounds, down 1.8 pounds from the previous week. Slaughter continues to run ahead of last year.

	BULL SIDE		BEAR SIDE
1)	Packers have increased the slaughter pace for cattle, which may indicate demand is improving. They may be willing to purchase at steady money this week.	1)	If cash cattle trade is steady this week, traders may be disappointed and the selling of futures could take place.
2)	Live cattle futures hold a discount to cash. If cash trades are at least steady with last week, futures should increase to move closer to the cash price.	2)	Feeder cattle futures are moving sideways and may have difficulty moving higher under current market fundamentals.
3)	Declining hog weights with a strong slaughter pace indicate hog supplies should be current and the market somewhat balanced. The weekly hog weights declined by 1.8 pounds to an average of 280.7 pounds.	3)	Hog weights continue to remain higher than a year ago. The weekly average weight of 280.7 pounds is 5 pounds higher than a year ago.
4)	All hog contracts made new highs Wednesday with deferred contracts holding those new highs. The trend remains up.	4)	Packers purchased quite a few hogs Wednesday without having to be aggressive. The hog supply remains plentiful.