Friday Morning Livestock Market Update - No Cash Trade for Fed Cattle

GENERAL COMMENTS:

Live cattle futures were mixed Thursday with a lack of news to trade. In the last two weeks, the headlines continuously discussed the surplus of market ready cattle in the North and how the packer holds all the cards in current negotiations. This week's cash trade has been extremely quiet. Given the recent weakness in negotiated cash prices, Friday's trade could be a day of catch up for packers to get their needs purchased at whatever it takes, or they may decide to wait out the producer to get a cheaper price next week. Feeder cattle strength Thursday was supported by a higher Feeder Cattle Index. Sale barns across the country are seeing buyers willing to pay more for Weight 1 steers than previous weeks.

Lean hog futures were weaker again on Thursday. It is the same story week after week with more hogs available, higher weights and lack of pork demand. While the USDA predicts a higher pork demand next year than originally expected, the market still has yet to see any life in this market. Pork cutouts were down slightly, and the CME lean hog index is weaker. Slaughter is trending lower this week at 487,000 head. That is 7,000 head below last week and 3,000 head below last year.

	BULL SIDE		BEAR SIDE
1)	Weakness in the corn market brings more confidence for buyers purchasing cattle on better margins.	1)	Expectations for Mexican cattle imports is speculated to be 750,000 to 1 million head in 2026 using the current pace of growth.
2)	Beef packers will need to be aggressive today, given the lack of cash trade this week.	2)	Beef exports are lacking due to high prices for U.S. beef. An extended high cost could cause long term damage to international buyers as they get comfortable with purchasing from competitors.
3)	The calendar says demand for pork should grow as we approach the holidays.	3)	Chinese pork purchases have been lacking, taking away a big portion of typical international demand.
4)	Managed money holds a record short lean hog position. Any offsetting of those positions should be strength to the market.	4)	Lack of pork demand is difficult to overcome.