Thursday Morning Livestock Market Update - Traders Wait for Cash

GENERAL COMMENTS:

Traders were a bit disappointed packers were not more aggressive Wednesday due to a lighter amount of cattle purchased last week. Now it is Thursday and solid bids and offers still have not been posted. The weakness of boxed beef may keep packers holding the line as continued weakness indicates softer demand. Boxed beef Wednesday showed choice down $5.56 and select down $1.61. Yes, cattle supply continues to remain tight, but it may not be quite as concerning if demand is slower. It is anticipated cash will trade Thursday as packers need to accomplish business. Some of the price expectations have been trimmed with steady cash likely.

Nearby hog futures seemed to be wound up over the holiday and were ready to push higher Wednesday. July and August gapped open and never looked back. July closed above $100 where price has not been since March 15. Packers were aggressive Wednesday with the National Direct Afternoon report showing cash up $1.66. Cutouts gained $1.20 on top of the large gain Monday. Packers still need hogs, which may result in higher cash being paid again Thursday. Deferred contracts continue to struggle with some contracts posting losses Wednesday.

	BULL SIDE		BEAR SIDE
1)	Packers will need to step up to the plate as they did not purchase many cattle ahead last week. This may mean they pay at least steady money.	1)	Now that the corn market has settled down, feeder cattle futures are correcting after being overdone to the upside.
2)	Lighter weight cattle are being pulled ahead as supply remains tight. This reduces the amount of beef available for demand.	2)	Lower boxed beef may result in lower cash being paid for cattle again this week.
3)	Packers remain aggressive as pork demand has increased and supplies have tightened.	3)	Both July and August hogs left chart gaps on the open yesterday which may be filled at some point.
4)	Increasing cutout prices keep the market supported. The gain so far this week has been $6.75. Further gain is expected today.	4)	The spread between nearby and deferred hogs is incredibly wide and should correct.