Friday Morning Livestock Market Update - Cash Cattle Trade Higher This Week

GENERAL COMMENTS:

Cash cattle trade was expected higher this week and there has been light trade indicating that is the case. Some trade in the North took place between $1.00 to $3.00 higher. Southern cattle also showed very light activity $2.00 higher. Packers remain reluctant even though boxed beef prices have been strong. Thursday, choice cuts were steady at $287.91 with select gaining $2.23 at $275.87. Packers have been waiting to do business for some reason, even though cash cattle will not get any less expensive. The Cattle on Feed report today may keep futures in a position of two-sided trading until the numbers are seen. On feed numbers are estimated at 96.1%, placements at 97.2%, and marketings at 104.0%.

Hog futures spent much of the day in negative territory but managed to come back at the end of the day with May through August closing higher. The prospect for higher cutouts looked promising and traders took a chance on a positive afternoon report. That was received as cutouts gained $2.98 with bellies again providing support with a gain of $10.02. Cash was lower but the decline was minimal with the National Direct Afternoon Hog report down $0.27. The general pattern is that traders will trade the direction of cutouts the following day. The trading action late Thursday would indicate this might be the case. Bullish traders are desperately searching for support.

	BULL SIDE		BEAR SIDE
1)	New contract highs were established across live cattle contracts Thursday, keeping the market bullish.	1)	Proof of greater export business due to the ban on Brazilian beef to China will need to be seen or that card will be taken off the table.
2)	The suspension of Brazilian beef shipments to China may increase export business while the ban is in place.	2)	New contract highs cannot take place indefinitely and with the market being overbought, a retracement is likely.
3)	Pork cutouts have been higher overall this week. There could be a trend developing with support building.	3)	Hogs have been unable to find consistent fundamental support. This has kept the market choppy.
4)	Reduced slaughter might improve cutout prices. It is uncertain whether reduced slaughter is just for packers to improve margins or if supplies are tightening.	4)	Weekly export sales will need to be good, or traders could liquidate positions into the weekend.