Wednesday Morning Livestock Market Update - Mixed Futures Trading Expected

GENERAL COMMENTS:

There was nothing in the cattle complex to trigger aggressive buying Tuesday. It is likely cash might be higher this week, but traders did not buy into that idea Tuesday. Higher cash is already factored in with the possibility cash could trade steady with last week. Packers may not be overly aggressive to purchase as there is weakness in boxed beef. Tuesday, choice cuts were $3.20 lower with select cuts down $1.63. Traders are turning their attention to the Cattle on Feed report to be released Friday and may be positioning themselves ahead of the report. On-feed numbers as of Sept. 1 are estimated at 97.6% of a year ago. Placements in August are estimated at 93.6% with marketings at 94.4%.

Hogs were able to rebound Tuesday, likely in reaction to slightly stronger cash and strong cutouts Monday. Higher cash did not translate through to Tuesday with the National Direct Afternoon Hog report down $0.05. Cutouts showed slight strength with a gain of $0.17. Futures could retest the recent highs, which are now a level of technical resistance. A break above that level could trigger short-covering as fund traders might add more to their long positions. The prospect of higher cash and cutouts could make that happen.

	BULL SIDE		BEAR SIDE
1)	Cash cattle are not expected to trade any worse than steady, which would continue to provide support to the market.	1)	Cattle futures fell back after reaching new contract highs again Tuesday. Futures may slip back further ahead of the Cattle on Feed report as traders may liquidate some long positions.
2)	The estimates for the Cattle on Feed report are friendly and would provide support to the market.	2)	Higher cash is already factored in. If cash cattle trade steady this week, it would be a disappointment, triggering further selling pressure.
3)	Pork cutouts have been higher the first two days of the week, which could indicate consumer demand for pork is improving. Further gains would be supportive.	3)	Hog futures may have a difficult time moving above price resistance from last week. Sell orders may be resting at that level.
4)	Packers may be more aggressive Wednesday as they will want to procure more hogs ahead of the second half of the week as usual.	4)	Continued volatility of cutouts keeps traders cautious. Weakness in cutouts triggers selling as traders are quick to liquidate.