Cattle futures trading began without much fanfare, but as selling pressure mounted, the number quickly fell. The dismal weekly export sales may have had some impact on the market as they totaled 6,300 tonnes, down 37% from the previous week. Pressure also came as cash holdings in the South traded lower than earlier in the week, with cash holdings at $174, down $3 from last week. Northern cattle traded at a price $4 lower, in line with previous trading. Cattle futures led to a decline in cash and now remain at a discount for now. Some futures trading activity may have been impacted by the end of the month, but that certainly doesn't mean futures will recover today. Stronger packaged beef could generate some buying interest early in the month, but traders will remain cautious. Boxed beef was higher, the selection was $1.99 and the selection was $0.66.
Hogs defied Wednesday's lower cash and cuttings to post gains in all contracts except December. December has two weeks of trading left and will remain close to the index. Packers had to purchase more hogs for the week, resulting in the National Daily Direct Afternoon Hog report showing a profit of $0.54. February futures managed to close the chart gap yesterday, which could lead to some selling pressure if there is early weakness today. The news that Mexico is temporarily halting pork exports from Brazil offers potential for further exports from the US. Cutouts recorded a decline of $0.14 on Thursday as current demand remains questionable. Weekly export sales of 21,200 tons were 20% less than the previous week.
| Bull side | BEAR SIDE | ||
| 1) | Livestock futures are at a discount to cash, which should provide some support to the market. | 1) | Less cash this week does not bode well for next week. It's too early to tell, but weaker prospects will cause the Packers to become less aggressive. |
| 2) | For February and later livestock contracts, the chart gaps are still well above the market. Gaps are generally filled at some point during the term of the contract. | 2) | The demand for beef has not yet increased. Without consistent support from packaged beef, prices could remain under pressure. |
| 3) | Potentially increased pork demand from Mexico could support the pork market if there is a noticeable increase. | 3) | The February hogs closed the chart gap yesterday, which could increase selling interest from technical traders if the market shows weakness today. |
| 4) | Hog futures for April and later have chart gaps that are not far above the market and may close sooner rather than later. | 4) | Cash guzzlers are expected to be lower today as packers have likely already purchased what they need for the week. |
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For our next livestock update, please visit our Midday Livestock Comments between 11 a.m. and 12 p.m. CST. Also, stay tuned to our Quick Takes throughout the day for regular futures market updates.
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