GENERAL COMMENTS:
Cattle had a great trading session on Thursday, bringing a little life back to a dreadful market as of late. Live cattle led the way with most contracts trading $2 to $4 higher on the day. Feeder cattle followed along with most contracts over $6 higher.
Hogs had a rough day Thursday with most futures contracts trading 30 to 40 cents lower on the day. Pork cutouts were down $4.50 at $91.12 but the major shock was a huge decline in pork bellies. Pork bellies were down $32.13 -- one of the biggest drops we've seen. Slaughter numbers were down Thursday.
| BULL SIDE | BEAR SIDE | ||
| 1) | If beef product labeling is announced this week as U.S. Agriculture Secretary Rollins suggested, the market is hoping for country of origin to be on the label, giving way for consumers to demand American products. |
1) | The news cycle has the greatest risk for the cattle markets. The government is trying everything they can to reduce the cost of beef in the grocery store but also regain some herd size. Both goals are difficult to use policy or government intervention to accomplish each at the same time. |
| 2) | Momentum from a futures bounce could help with a technical rally after a disappointing last couple of weeks in the cattle complex. |
2) | Sale barn values of feeder cattle are still lower in most locations except for lighter-weight cattle. |
| 3) | Slaughter numbers on hogs were down by 19,000 head week-over-week and 20,000 head year-over-year. A lower day of slaughter could limit pork to hit the market, giving way to a small demand rally. |
3) | A break in pork cutout values as well as hog index prices does not bode well for continued futures strength. |
| 4) | Labor Day weekend can bring some end of the summer grilling to help both pork and beef prices. |
4) | From a technical perspective, hogs have some resistance to break through on the chart to continue higher. Fundamentally it is going to be difficult to do so with lower cutout values. |
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