Thursday Morning Livestock Market Update - Mixed Trading Expected Ahead of Cattle On Feed Report

GENERAL COMMENTS:

Feeder cattle closed higher but not with the exuberance it had the previous three days. The larger price rally was a surprise relative to the cash weakness seen for live cattle, but it was not a surprise relative to the higher prices being paid for feeder cattle in the country. That may have run its course as traders turned their attention to the upcoming Cattle on Feed report to be released Friday. 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%. It is not surprising to see a wide range of estimates for placements as that number had been difficult to predict for quite some time. Boxed beef price closed lower on Wednesday with choice down $2.40 and select down $0.92. The anticipation is for cash cattle to trade lower again this week.

Hog futures showed a nice turnaround Wednesday with numerous contracts posting triple-digit gains. The market may have completed its technical correction which may generate further buying interest in anticipation of continued strength. The packers were aggressive with the National Direct Afternoon Hog report showing cash up $2.55. Pork cutouts did not echo that gain as they slipped $0.08. Packers may need more hogs and might increase bids again Thursday as they need to supply the higher slaughter pace and purchase ahead for the Thanksgiving week. Weekly export sales today are expected to be better than last week and may provide some direction. Hog slaughter on Saturday has been difficult to pin down with the current estimate being around 132,000.

	BULL SIDE		BEAR SIDE
1)	Strong cattle marketings in October are expected on the Cattle on Feed report, indicating strong demand.	1)	Traders positioning ahead of the Cattle on Feed report may leave futures choppy and sideways at best.
2)	The rebound of cattle futures recently has turned the market higher providing traders more confidence to buy back into the market, anticipating tight supplies and higher prices.	2)	Boxed beef prices continue to struggle, indicating reduced consumer demand. This may leave packers less aggressive in the cash market this week.
3)	The rebound of hog futures may have negated the recent downtrend. Futures may return to the highs as fund traders may be active buyers.	3)	Pork cutouts have not been performing well this week which may temper the upside potential for cash and futures.
4)	Hog weights last week were 0.6 pounds lower than a year ago, averaging 287.4 pounds.	4)	Weekly hog weights increased by 0.8 pounds from the previous week, averaging 287.4 pounds.