The proverbial rug was pulled from under the cattle the past two days. Futures closed at the lowest level in two weeks. Last week's strong cash prices and Thursday's initial trade at steady cash are not providing continued support. Light trade took place for Northern dressed cattle at steady money with last week. However, the greater concern is that boxed beef prices are not performing well. Choice boxed beef fell $3.66 and select declined $2.69 on Thursday. Could it be that consumers are concerned about the tariff-free beef that is to be imported over 90 days that beef demand is being affected? The Cattle on Feed report will be released at 2 pm. Central Time today. Estimates are for cattle on feed on September 1st at 101.89% of a year ago, with a range of estimates of 101.4% to 102.3%. Placements in August are at 96.8%, with a range of estimates of 93.9% to 98.4%. Cattle marketed is estimated at 96.1% with a range of 95.3% to 96.4%.
Hog futures continue to struggle. The positive aspect of Thursday is that they did not make new contract lows in the December contract. However, that cannot be said about the rest of the complex, as contracts made new lows. Support remains elusive as the path of least resistance has been down. Pork cutouts did find support on Thursday, posting a gain of $1.19, but that is a small consolation in the current bearish market. There was no price change reported on the National Daily Direct Afternoon Hog report due to confidentiality, as only 45 head were traded. Short covering is likely into the weekend; short-term traders do not like to carry many exposed positions through the weekend.
| BULL SIDE | BEAR SIDE | ||
| 1) | The Cattle on Feed report is expected to show lower placements than a year ago. The herd is not rebuilding. | 1) | Short-term demand from retail outlets may be impacted by some consumers reducing ground beef purchases due to the tariff-free imports allowed into the country. |
| 2) | If cash trade is steady this week, futures should find support as the price discount will be reduced. | 2) | The number of cattle on feed is expected to be higher than a year ago, according to today's report. |
| 3) | Hog futures may see strength as short-covering may take place ahead of the weekend. | 3) | New contract lows on Thursday maintain the bearish mood of the market. Buyers see little to provide support. |
| 4) | The packers may be more aggressive in the cash market due to very few hogs sold on Thursdays and the possibility that they need to finish purchases for the week. | 4) | The path of least resistance is down and may take a monumental effort and better fundamentals to turn the market higher. |
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