GENERAL COMMENTS:
Traders were cautious in live cattle futures Thursday as export sales were not exceptional and the upcoming Cattle on Feed report provided uncertainty. However, cash cattle began trading after the close at $1.00 to $2.00 higher. There were a few dressed sales marked at $3.00 higher. This was a bit of a surprise and may increase futures buying interest Friday despite the Cattle on Feed report to be released this afternoon. Futures may also find support from higher boxed beef prices with choice up $0.40 and select up $1.93 Thursday afternoon. Feeder cattle futures continued to remain stronger than live cattle. The November contract went off the board on Thursday with January moving to the front-month. USDA will release the Cattle on Feed report at 2 p.m. CST today. The estimates are for on-feed as of Nov. 1 at 99.9% with a range of 99.5% to 100.1%. October placements are estimated at 103.3% with a range of 101.4% to 107.0%. Marketings in October are estimated at 105.1% with a range of 104.7% to 105.4%.
Hog futures spent some time in negative territory Thursday, but were able to close higher across the board. Gains were minimal -- but gains nevertheless. A low export sales number limited upside potential along with cash uncertainty and lower cutouts. Export sales were 9% lower than the previous week at 18,100 metric tons (mt). The National Daily Direct Afternoon Hog report showed very light trading activity with the packers not releasing a price change due to confidentiality. Pork cutouts took another hit with a decline of $1.53. This may make it difficult for futures to find aggressive buying interest Friday. Saturday slaughter is estimated at 123,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cash cattle trading higher after the close of futures Thursday may support the market Friday as futures adjust to higher cash. | 1) | The Cattle on Feed report has been notorious for placements higher than the trade estimates. This may keep trading reluctant to support the market Friday. |
| 2) | The strength of feeder cattle might continue to support live cattle futures. Lower placements than estimated in October would increase buying interest. | 2) | The higher cash trade may have already been factored in with traders focused on positioning themselves ahead of the Cattle on Feed report. |
| 3) | Hog futures have held well this week despite some pressure from lower cash and cutouts. | 3) | The hog market has been struggling recently with lower cash hog prices and cutouts. This may limit further strength. |
| 4) | Hog futures have corrected from being overbought and may remain in a sideways trading pattern with the market finding support. | 4) | Packers may not be aggressive Friday as they might have purchased much of what they need to cover slaughter needs for the Thanksgiving holiday week. |
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