Thursday Morning Livestock Market Update - Mixed Trade For Cattle Futures

GENERAL COMMENTS:

There have been rumors about the potential of banning beef exports to reduce domestic prices. This has been couched in the talk of a ban on diesel and fertilizer exports. None of this has come to fruition, but it provides uncertainty to the market. When the market operates outside fundamentals, it creates uncertainty and volatility. Live cattle futures regained the losses of Tuesday, while feeder cattle regained their losses and then some. The port in Santa Teresa, New Mexico, will reopen for cattle imports today. It is expected that 700 head of cattle will cross into the U.S. Boxed beef prices reversed course on Wednesday, with choice down $1.58 and select down $5.51. Some light cash cattle trade took place on Wednesday at a steady price with last week. Today is the last trading day for September feeder cattle, with October taking over as the lead month.

Hog futures showed further pressure, with contracts closing the chart gaps from earlier in the week. The exception was the February contract, as the gap remains open. The October contract was the only one that closed higher as traders try to keep it in line with cash as it moves closer to expiration. The National Daily Direct Afternoon Hog report was down $0.25 on a moderate hog movement. Pork cutout values declined $1.17. The market is struggling to regain the losses since the beginning of September, but has been unable to find long-term buying interest. Weekly hog weights increased to 286.9 pounds.

	BULL SIDE		BEAR SIDE
1)	Steady cash cattle prices should provide support to futures as they hold a discount.	1)	Cattle futures are expected to remain choppy as uncertainty again dominates the market.
2)	A ban on beef exports is unlikely. If it were to happen, it would be detrimental to trade relationships and likely not reduce domestic prices.	2)	Another port opens to cattle imports from Mexico. This will add more cattle to feedlots.
3)	Hog futures are oversold, and closing the chart gap in tbh February contract could trigger short covering ahead of the weekend.	3)	Weekly hog weights increased 1 pound to average 286.9 pounds. This is just 0.1 pound below a year ago.
4)	Weekly hog weights are near the same level as a year ago when hog prices were higher. Slaughter continues to run higher, indicating good demand.	4)	The February hog contract has yet to fill the lower chart gap. This could be accomplished today.