Friday Morning Livestock Market Update - Negative News Pressures the Market

GENERAL COMMENTS:

Cattle were hit with negative news Thursday as Tyson announced the closure of their beef processing facility in Joslin, Illinois. This facility employs 2,500 people and can process nearly 3,000 animals per day. This announcement was made without warning and most employees' last day was Thursday. Not only this facility, but Tyson is putting their Pasco, Washington, facility up for sale and are phasing out the Eagle Mountain, Utah, case-ready facility. Packers have been running in the red for quite some time and measures are being taken to reduce the losses. This increases the negativity in the maket. This is not supportive of cash prices. This news may have been factored in due to the weakness of the past two days. Boxed beef prices were mixed on Thursday with choice up $3.62 and select down $0.57.

Hog futures exhibited similar weakness Thursday, but for different reasons. Packers have positive margins as they have been able to purchase hogs at lower prices relative to cutout values. Although they were more aggressive in the cash market on Thursday, they have paid lower prices overall this week for hogs. The National Daily Direct Afternoon Hog report showed cash up $1.56 as they wanted to finish up buying for the week. Pork cutout values fell $1.23. The August contract ceases trading Friday, with October taking over as the lead contract.

	BULL SIDE		BEAR SIDE
1)	The Tyson news may already be factored in after the past two days of weakness. Short-covering may take place ahead of the weekend.	1)	The Tyson plant closings and restructuring may mean less buying interest from packers and lower prices.
2)	Cattle supplies are tight and will remain that way for some time to come.	2)	Cattle futures may retest the lows from late July as negative news weighs on the market.
3)	Hog futures closed chart gaps on Thursday. Technical traders may buy into the market on the expectation of a price bounce.	3)	If hog futures are unable to hold support, further liquidation may unfold as traders will exit long positions.
4)	Futures held support on Thursday. If support holds early in the trading day, short-covering may occur.	4)	Packers have seen no shortage of market-ready hogs available, even though slaughter continues to run strong. They have not had to be aggressive in the cash market.