Wednesday Morning Livestock Market Update - Beef Demand Supports Futures

GENERAL COMMENTS:

Cattle futures opened near where they closed on Monday and moved substantially higher from there. News of the New World screwworm has not impacted beef demand. Cattle supplies remain tight and will remain that way for some time to come. Traders do not seem concerned about the Cattle on Feed report that will be released after the close on Thursday and ahead of a three-day weekend. Or traders may feel the report will be bullish and want to buy into the market ahead of it. The average trade guess for the report is for on feed at 102.3% of a year ago. Placements at 92.8% and marketings at 89.0%. Boxed beef prices were higher, with choice up $4.53 and select up $0.44. The strength this week of boxed beef and the increase in futures may result in packers having to pay higher prices for cattle.

Hogs continued to struggle. The July, August and October contracts closed lower, while later contracts showed minor gains. July took the brunt of it, falling to the lowest price since Nov. 21, 2025. The National Daily Direct Afternoon Hog report showed cash up $0.32 with a good volume of hogs purchased. However, pork cutouts showed further weakness, declining $1.53. There is no indication of a bottom in this market. Fund traders are net short and have increased their short position. Futures are oversold, but that is having no impact on trading activity. Packers continue to have sufficient hogs available, even though slaughter has increased compared to a year ago.

	BULL SIDE		BEAR SIDE
1)	The strength in boxed beef indicates demand remains robust despite recent news about the New World screwworm. Consumers feel confident in the safety of consuming beef.	1)	The rebound in cattle futures may be short-lived as traders may take a short-term profit ahead of the Cattle on Feed report.
2)	Higher boxed beef and strength in futures will give feedlots confidence to hold for higher cash.	2)	The strength of boxed beef may reach a threshold, as renewed higher prices may reduce demand.
3)	Hog futures are oversold and could see some short-covering ahead of the three-day weekend.	3)	There is no sign of a bottom in hog futures. The market is oversold, but the fundamentals do not suggest a change in trend.
4)	The recent sharp decline in crude oil will reduce fuel prices. This will allow for more disposable income for consumers, with pork demand benefiting from it.	4)	Packers continue to have plenty of hogs available. They do not need to bid aggressively to obtain what they need to maintain the higher slaughter pace.