The very small increase of cattle on feed continues to have a negative impact on futures. With the increase and with only a day and a half of kill, I do not anticipate the weakness from this factor to last long.

I do not perceive the on-feed report to have suggested anything that was not already known. I anticipate the weakness in futures to begin to subside. Not so much from anything being bullish, but that there is not much bearish either.

As the positive basis widens, it makes it more advantageous for packers to buy the futures discount and significantly unappealing for producers to market inventory significantly cheaper in the future. Therefore, I do not anticipate much pressure to be applied at this price level.

Selling futures at a spread this positive, with nothing new, would be perceived to only come from speculators. Without the help of a fundamental need to move inventory at such a discount, I would anticipate the selling to begin to subside.

For the packer, I could not imagine a more friendly environment in which to conduct business.

With feeder cattle, a great deal is riding on traders' ability to hold price above Friday's low.

A trade under $142.30 September will void the minor 5-wave move perceived made on Friday.

The basis remains friendly in the feeders as well to feed yards. The spread is at the top end of the channel it has been trading in since inception of the October contract. I continue to anticipate some strength in the futures ... if for no other reason than there is not much reason to push them lower.

Producers are not enticed to sell the discount and purveyors are enticed to buy it. Only a speculator at this time would have any interest in pursuing the downside. Not to say they can't move it lower, just that it will be harder for them to without commercial participation.

An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. Past performance is not necessarily indicative of future results.