Friday Morning Livestock Market Update - Higher Cash Cattle Trade Unlikely

GENERAL COMMENTS:

Cattle futures closed higher on the idea that cash cattle would trade steady to higher. Cash trading activity took place on Thursday at steady money. However, the hope for higher cash may have been taken off the table by the weakness of boxed beef on Thursday. Choice boxed beef fell $6.00, with select plummeting $7.70. This certainly will not help to foster higher cash trade. Feeder cattle posted nice gains, possibly solidifying a head-and-shoulders bottom. The November feeder cattle contract closed above the 100-day moving average for the first time since July 6.

Hog futures closed higher in contracts after the second half of next year. However, all contracts made new contract lows at some point during the day. The market has been unable to find support. Without consistent strength in cash and cutouts, there has been little reason for traders to buy into the market for the long term. Traders continue to trade short-term in an attempt to make a quick profit. Packers paid less for hogs again on Thursday and showed limited interest with light volume. The National Daily Direct Afternoon Hog report showed cash down $0.79. Pork cutout values were up $0.34, but that will provide little incentive to buy the market. The fund traders likely added to their net-short positions again this week.

	BULL SIDE		BEAR SIDE
1)	The November and later feeder cattle contracts closed above the 100-day moving average. This and a head-and-shoulders bottom could generate greater buying interest.	1)	The extreme weakness in boxed beef on Thursday does not bode well for the market. High food and fuel prices may reduce demand.
2)	Cash may be no worse than steady this week. This should support futures as they hold a discount to cash.	2)	Cash cattle may not trade any better than steady this week. It may be a disappointment to traders.
3)	Hog futures are oversold and could see a bounce ahead of the weekend.	3)	New contract lows in hog futures on Thursday do not bode well for the market. Technical traders continue to sell into the market.
4)	Low prices cure low prices, and hogs certainly have moved to a level at which demand should improve.	4)	There are plenty of hogs ready to come to the market. Packers remain less aggressive and have been able to purchase the hogs they need to maintain a strong slaughter pace.