Friday Morning Livestock Market Update - More Cash Cattle Trade Expected

Live cattle futures are finding difficulty in breaking through and closing above the $200 price. The weakness on Thursday may be temporary as the cash cattle trade will unfold fully Friday. Cash trade in the South has been steady to $1.00 higher with Northern dressed trade at $2.00 higher. Trading activity has been light, but it does indicate cash will trade higher for the week. Weekly export sales were better than last week, but not exceptional at 9,700 metric tons (mt). Boxed beef prices closed mixed with choice down $0.73 and select up $1.34, moving the price spread to $14.03. Traders are watching boxed beef prices closely as the recent activity may indicate prices may be wavering and near consumer resistance. There is no confirmed date when the Southern border will be reopened for cattle imports to resume from Mexico.

Hog futures struggled Thursday but held the recent gains despite minor declines. Futures may have some difficulty moving higher unless there is continued support from pork cutouts. Cutouts slipped $0.44. It was surprising to see a gain of $0.03 in the cash price on Thursday even though the activity was light. It has been a supportive week for cash but packers are not expected to remain aggressive Friday. Stability in pork cutouts would go a long way in supporting the market and pushing futures higher. Saturday slaughter has been revised significantly higher with the current estimate of 206,000 head.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are poised to move above $200 as packers have increased slaughter to meet demand. They may need to remain aggressive.	1)	Traders may become more nervous at these lofty price levels and the record-long feeder cattle and near-record live cattle fund trader positions. This could trigger liquidation.
2)	There is still no indication of lifting the restriction on cattle imports from Mexico. It was expected to take place next week, but that is being delayed.	2)	Boxed beef prices may be wavering as consumers may have reached a threshold of what they are willing to pay for beef.
3)	Hogs are holding the recent gains and with cash holding well this week, futures may renew the upward trend.	3)	Pork cutouts have not been able to establish solid support. The increased slaughter pace leaves plentiful supplies of pork for the retail market.
4)	Even though hog weights are higher than a year ago, packers continue to hold the slaughter pace above a year ago. They need hogs to satisfy demand.	4)	Hog futures may have reached a level at which prices may move in a sideways range for the time being as traders assess demand moving forward. .