Friday Morning Livestock Market Update - Hog Futures May See Further Weakness

GENERAL COMMENTS:

Cattle futures were higher Thursday with front-month October posting the greatest gain. Traders anticipated cash cattle could trade at least steady this week and were rewarded as packers stepped up aggressively. Northern dressed cattle traded as much at $4.00 higher while Southern live cattle traded $2.00 higher. This was a win for feedlots as their persistence paid off. This should provide further support to the futures market. Weekly export sales did not provide support as sales were 38% below a week ago. Boxed beef prices continue the lower trend with choice down $1.80 and select down $0.91.

Hog futures were under pressure but rebounded nicely from the lows during Thursday. It will be interesting to see how much of the Quarterly Hogs & Pigs report is factored in. Much of the report was considered neutral with all hogs and pigs on Sept.r 1 at 100% of a year ago. Hogs kept for breeding was 98%. Kept for marketing was 101%. These were close to trade estimates. The only real concern for the market was for hogs weighing from 120-179 pounds as that category was 103% compared to last year and hogs weighing over 180 pounds at 105% of last year. The packers remained aggressive Thursday with the National Direct Afternoon Hog report showing cash up $1.14. Pork cutouts were also supportive with values up $0.54.

	BULL SIDE		BEAR SIDE
1)	Cash cattle trading $2.00 to $4.00 higher should further support the market, keeping the uptrend intact.	1)	Slower beef export sales leave more beef available for the domestic market. This may put some pressure on the market along with slower consumer demand.
2)	Packers did not have many cattle purchased ahead of time and needed to be more aggressive in procuring the cattle they needed. Likely they may not buy many cattle for deferred delivery again this week.	2)	Boxed beef continues to show weakness, even though packers have slowed slaughter. Cattle weights are higher keeping more beef available to the market.
3)	Even though hog futures closed lower Thursday, the uptrend remains intact. The lows were rejected with contracts bouncing back into the close.	3)	The Hogs & Pigs report indicated more hogs will be available to the market over the next few months which may keep the packers less aggressive as those hogs will need to be marketed.
4)	Higher cash prices and higher pork cutouts may provide sufficient support to the market to overcome any bearishness from the Hogs & Pigs report.	4)	Hog futures are overbought and may settle back further ahead of the weekend as it is nearing the end of the month and end of the quarter.