Thursday Morning Livestock Market Update - Traders Find Little to Get Excited About

GENERAL COMMENTS:

Cattle traders did not have much to go on, leaving Wednesday's trading activity lethargic. The focus is on the cash market and what the packers must do to purchase cattle. They did not purchase many ahead for deferred delivery last week, leaving them in a position that they may need to be aggressive. However, the weakness of boxed beef is a cause for concern as it indicates demand remains slower than desired. The packers do not have much profit margin and will try to do what they can to maintain what little they have. Boxed beef prices Wednesday took a hit with choice down $3.72 and select down $3.59. It will be up to feedlots whether they want to hold cattle over for another week or if they will be content with steady prices.

The pattern of higher lows and higher highs in hogs was broken Wednesday as traders did not see much to get excited over and there was some positioning ahead of the Quarterly Hogs & Pigs report to be released after the close Thursday. The report is not expected to show any surprises, but traders will position themselves ahead of the report anyway. Reports always have the potential for surprising numbers. The National Direct Afternoon Hog report showed cash up $0.50 with a good amount of hogs sold. Cutout values showed a small gain of $0.14. The Quarterly Hogs & Pigs report will be released Thursday afternoon. The average estimate for all hogs and pigs on Sept. 1 is 100.5% with the range of 99.9% to 101.6%. Hogs kept for breeding at 97.6% with a range of 97.2% to 98.0%. Hogs kept for marketing at 100.8% with a range of 100.2% to 101.6%.

	BULL SIDE		BEAR SIDE
1)	There are some expectations feedlots may hold out for higher cash and if they do not receive it, they will hold cattle over for another week. Packers would need to step up if they need to purchase cattle.	1)	Boxed beef prices fell significantly Wednesday, showing continued weakness in demand.
2)	Cattle futures continue to hold gains in the expectation beef demand will improve through the end of the year.	2)	Weekly beef export sales are expected to be lower than last week due to international demand not being as good as hoped for this time of year.
3)	Fund traders hold a large net-long position in hog futures and a neutral or friendly report may increase buying interest.	3)	Hog weights remain 3.1 pounds above a year ago. Weekly pork production for the June through August quarter is estimated to be up at least 3.0% from last year.
4)	Weekly average hog weights have declined by 0.1 pounds to an average of 283.4 pounds. This is not much but weights are moving in the right direction.	4)	Hog futures may trade lower as traders prepare for the Quarterly Hogs & Pigs report. They do not want to be overly exposed into the report.