Thursday Morning Livestock Market Update - Cattle Markets Grapple With Uncertainty

GENERAL COMMENTS:

Traders turned a bit more aggressive in cattle futures on Wednesday. The cloud over the market is whether there will be a strike at the JBS Greeley plant. There is hope that a last-minute settlement will take place; otherwise, it could have an impact on the cash cattle trade. There has been no cash trade so far this week, and it is doubtful that trade will take place today. Boxed beef prices were higher, with choice up $1.80 and select up $1.06. Packers continue to reduce slaughter. This should support boxed beef prices, but the reduced slaughter could also be the result of tight cattle supplies. The other aspect of that is that cattle weights are heavy, which somewhat makes up for the tighter cattle supplies.

Hogs have been surprisingly strong and continue to either regain more of the recent losses or make new highs, depending on the contract. It is interesting that even though futures have regained the losses that developed due to an overbought market, the market is not overbought, even with later contracts making new highs. Technically, the market has more to go before being overbought. The National Daily Direct Afternoon Hog report did not show any price change due to no information being released on Tuesday. The weighted average price was reported at $91.21. Pork cutout values increased by $0.67.

	BULL SIDE		BEAR SIDE
1)	Cash cattle are expected to be no worse than steady, even if there is a strike at the JBS plant. Packers need cattle to meet beef demand.	1)	If the JBS plant strike moves forward, cash cattle prices could trade no better than steady with last week and possibly decline as other plants would have more access to cattle.
2)	Higher boxed beef prices again on Wednesday should provide further support to futures today.	2)	Cattle futures have had difficulty breaking through price resistance, which may indicate a threshold has been reached.
3)	Hog futures have been in a strong uptrend and may continue this way, as the market is not overbought, with traders remaining optimistic about demand.	3)	Weekly hog weights declined 0.6 pounds but remain 3.3 pounds above a year ago.
4)	Weekly hog weights declined by 0.6 pounds to average 291.4 pounds.	4)	Now that hog futures have regained the losses, it will take continued strong fundamentals to move the market much higher.