Thursday Morning Livestock Market Update - Cash Cattle Are Expected Higher This Week

GENERAL COMMENTS:

Cattle futures received strong buying interest Wednesday, possibly on the idea that the port strike might be bullish for the market as beef imported will be impacted. Exports will also be impacted, but the focus may have been on imports. Consumers may also increase their meat buying and stock up on supply as the COVID disruptions are still fresh on their minds. There were no cattle traded Wednesday, but the higher futures may indicate higher cash prices this week. Cattle futures were sharply higher despite the renewed weakness of boxed beef. Choice cuts declined by $0.36 while select cuts declined by $1.37. The packers do not want to pay more for cattle but feedlots expect higher prices and are willing to hold for them even if it means they may be holding cattle over to next week. Feeder cattle futures posted stronger gains than live cattle, breaking above the recent chart resistance and triggering further buying interest. There is a strong demand for feeder cattle in the country with auction prices stronger this week.

Hog futures shot up Wednesday to regain the uptrend as more money flowed into the market. Now that the trend is higher, buying interest may increase as traders feel confident about higher prices. The nearby hog futures may be setting their sights on chart resistance about $1.00 higher. The packers were not as aggressive as anticipated with the National Direct Afternoon Hog report down $1.88. Cutouts were under pressure with values down $1.29. Hogs were heavier last week, averaging 284.2 pounds. Weekly export sales will be released Thursday and are expected to show good sales.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are within striking distance of the highs from late July. The strength of futures may be able to push above that resistance.	1)	Packers may hold the line on cash. If feedlots begin to sell at steady cash, sales may increase significantly, triggering the selling of futures.
2)	Traders expect cash cattle will trade higher, further supporting the market. Tight cattle numbers will continue for the foreseeable future.	2)	The weakness of boxed beef prices Wednesday may indicate prices remain choppy and unable to trend higher.
3)	Traders continue to support the hog market, even though cash and cutouts are not providing much support. Traders are trading the trend and the expectation for better prices through the end of the year.	3)	Hog weights increased last week to an average of 284.2 pounds, up 0.8 pounds from the previous week and up 2.3 pounds from a year ago.
4)	The packers want and need hogs and continue to purchase to keep plants running on full schedules. They may need to buy more before the end of the week to fill the demand.	4)	Hog futures are overbought and may retrace if cash and cutouts remain in a range.