Friday Morning Livestock Market Update - Traders Will Position Ahead of the Cattle of Feed Report

GENERAL COMMENTS:

The packers needed to purchase cattle and they did not wait until today to do it. Cash cattle jumped $2.00 for both Northern dressed and Southern live. The inability of the packers to hold the line on cash is a testimony of the leverage feedlots have maintained and the need for the packers to meet steady demand. Boxed beef prices were lower but that will not have much impact on the market after the strength that has been seen recently. Choice boxed beef was down $0.24 with select down $1.43. The larger influence Friday will be the Cattle on Feed report. Now that traders have adjusted to the higher cash, they will position themselves ahead of the report. The average estimate for cattle on feed as of Oct. 1 is 99.7% of a year ago with the range of estimates from 99.1% to $100.1%. Placements in September are estimated at 95.6% with a range of 94.2% to 99.0%. Marketings are estimated at 102.2% with a range of 98.1% to 103.4%.

Hog futures traded in negative territory in contracts through October 2025 on Thursday. There was an unwinding of spreads which put greater pressure on nearby contracts, eliminating Wednesday's gains and then some. First, traders did not like that weekly pork export sales were 42% below the previous week at 22,200 metric tons (mt). Secondly, it appeared the packers were not as aggressive in the cash market, eventually showing cash down $2.59 on the National Direct Afternoon Hog report. Pork cutouts showed some weakness with values down $0.07. The weakness of futures on Thursday did not change the strong uptrend but repositioned some traders ahead of the weekend and for the end of the month. Saturday slaughter is estimated at 154,000 head.

	BULL SIDE		BEAR SIDE
1)	Higher cash cattle again this week bodes well for the market moving forward. Packer margins have improved and higher cash is the result as they need cattle.	1)	The percentage of placements on the Cattle on Feed report has always been a wild card. Traders may not want to be overly long in the market and will sell to position themselves for the report and the weekend.
2)	There has been a slight increase in heifer retention, but that has been limited. The rebuilding of the cattle herd will take time. Cattle supplies will remain tight for some time to come.	2)	Live cattle futures are near price resistance and may have difficulty penetrating it as futures are overbought.
3)	Hog futures remain in an uptrend with the strong slaughter pace indicating continued strong demand.	3)	Cash hogs are expected to be lower Friday, which could increase trader selling ahead of the weekend along with the fund traders holding near-record-long positions.
4)	Weekly hog weights increased by just 0.1 pounds last week reaching an average of 285.5 pounds. This is only 0.3 pounds above a year ago.	4)	The supply of market-ready hogs has been sufficient to meet the demand for the higher slaughter pace. The packers have not had to chase the market to find hogs.