GENERAL COMMENTS:
Cattle futures showed limited price movement on Wednesday as cash cattle trade had not developed, and traders' attentions began to look ahead to the Cattle on Feed report to be released on Friday. The average estimate of cattle on feed on September 1 is 100.7% of a year ago. Placements in August are estimated at 98.5%. Cattle marketed in August are estimated at 96.5%. The report has been notorious for actual placement being higher than estimated. Dry weather has been prevalent in cattle country over the past month which may result in higher placements into feedlots due to pasture conditions and the delay in planting and growth of the wheat crop. There have been no cattle traded so far this week with trade not likely to take place today. Boxed beef prices suffered with choice closing down $2.53 and select down $2.57.
Hog futures traded in a narrow range but held onto the recent gains. December and later contracts closed at the highest level since June 7. It was surprising the market held as it did due to the pressure on cash and cutouts. The National Direct Afternoon Hog report showed cash down $2.45 moving the weighted average price to $74.88. Pork cutouts were down $0.59. Hog futures have shown surprising strength over the past month without solid support from cash and cutouts. It may be difficult for futures to continue to trend higher without support from the cash market. Saturday slaughter is estimated at 135,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | The feedlots seem determined to regain control of cattle prices and have not sold any cattle so far. They are holding for higher prices. | 1) | Boxed beef prices took a hit on Wednesday. Beef demand is struggling and may limit the upside price potential. |
| 2) | There is little evidence of the rebuilding of the beef herd. If the dryness persists in cattle country, that may be delayed leaving continued tightness of supply. | 2) | The upcoming Cattle on Feed report has been notoriously bearish in the placement category, and this may keep trading activity subdued ahead of the report. |
| 3) | Hog futures moved above technical resistance and held above it on Wednesday. Fund traders have been increasing their long positions. | 3) | Hog weights remain 4.6 pounds above a year ago averaging 283.5 pounds. New crop corn is becoming available which may increase weight gain and provide more pork. |
| 4) | Hog weights declined by 0.5 pounds last week to an average of 283.5 pounds. There is a less tonnage available to the market. | 4) | The decline in cash and cutouts on Wednesday may impact the market negatively today. Traders need positive fundamental news to support the trend. |
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