Friday Morning Livestock Market Update - Futures May See Further Pressure

GENERAL COMMENTS:

The hope for steady cash trade in the cattle market dissipated Thursday and Southern live cattle traded $2.00 lower and Northern dressed cattle traded $3.00 lower. This triggered selling in the futures market with the December live cattle contract closing at the lowest price since Sept. 19. Feedlots did not want to hold cattle over for another week and risk yet lower prices. Further cash sales Friday may remain at the same prices. The weakness of boxed beef remains a concern and will not provide support to the market. Boxed beef prices fell with choice down $3.14 and select down $2.00. Beef packer margins are similar to a year ago and remain significantly below the 3-year average. This will keep packers on the defensive as they try to improve margins.

Hog futures were under the most pressure seen in quite some time Thursday. End of 2025 and early 2026 contracts were mixed on light trade because much can happen before then. The combination of cash weakness and further losses in cutouts triggered selling. The National Daily Direct Afternoon Hog report showed cash down $2.80 as the packers had most of their needs purchased for the week. The larger concern was the drop in pork cutouts of $3.19. Cutouts were lower the entire week with the decline on Thursday similar to what was seen Tuesday. This may trigger further liquidation as fund traders hold record-long positions and futures are overbought. Weekly export sales need to be strong on Friday's report or traders may view the market as overpriced.

	BULL SIDE		BEAR SIDE
1)	December live cattle still has a gap above the market that has not been filled. Gaps are usually filled sometime during the life of the contract.	1)	Boxed beef prices continue to weaken as slowing demand is a concern both domestically and internationally.
2)	Lower boxed beef prices should stimulate demand and keep packers needing to fill that demand. Cattle numbers are tight and will remain that way for a time.	2)	Feedlots had been holding cattle over hoping for higher prices, but there comes a time when they need to be sold, and this week was another one of those times.
3)	The hog market maintains positive fundamentals and a price retracement may be a buying opportunity.	3)	Pork cutouts showed weakness the entire week and finally translated over into lower cash. There may be further weakness Friday.
4)	Weekly pork export sales are expected to be good, indicating continue strong export demand.	4)	Fund liquidation generally lasts for 2 to 3 days. Further selling pressure may be seen Friday ahead of the weekend.