Thursday Morning Livestock Market Update - Futures May Trade Higher Thursday as Traders Buy The Weakness

GENERAL COMMENTS:

Live cattle futures added another day to the recent sideways trading pattern that has developed. Traders are waiting for cash to provide direction. Cash cattle have yet to trade with packers and feedlots determined to accomplish business on their terms. Feedlots seem current and can afford to carry cattle over for another week while the packers have some cattle already purchased, possibly limiting their need to be aggressive. Boxed beef prices provided little direction with choice down $2.50 and select up $2.37. There has been no further news about the restriction of cattle imports from Mexico which may provide continued support to the market. Feeder cattle futures fell back Wednesday but the weakness is not likely to trigger further liquidation. Demand for feeder cattle at auctions remains strong.

Hogs have recently shown more daily volatility which could signal uncertainty. Managed money traders are holding a record-long position causing some nervousness. However, this has not been enough to trigger liquidation. Fundamentals have been supportive but may not be enough to continue the upward price trend. The National Daily Direct Hog report showed cash up $0.79 as packers needed hogs to finish much of their buying for the week. They may not be aggressive Thursday and bid lower on clean-up activity. Pork cutouts slipped $0.01, providing little direction for trading Thursday.

	BULL SIDE		BEAR SIDE
1)	No further progress has been reported on the restriction of cattle imports from Mexico. This eliminates around 100,000 cattle per month that generally come into the U.S.	1)	Cattle futures have been unable to break above resistance and renew the uptrend even though cattle imports from Mexico have been restricted.
2)	Cattle futures have developed a sideways trading range and are building support in anticipation of strong demand supporting the market.	2)	The seasonality and time of year may limit further gains in cattle futures through the end of the year.
3)	Weekly hog weights averaged 289.1 pounds and 1.5 pounds lower than a year ago.	3)	Hog weights average 289.1 pounds, an increase of 0.6 pounds from the previous week. Cheap feed is pushing hog weights higher.
4)	The packers continue to maintain a higher slaughter pace than a year ago. Their margins are good and demand remains strong.	4)	Increasing daily volatility often takes place when a market is near the top. Traders become increasingly nervous and will trade only for the short term as shown in hogs over the past week.