Wednesday Morning Livestock Market Summary - Traders Look for Stability Midweek

GENERAL COMMENTS:

Cash cattle markets are expected to remain quiet early Wednesday morning with limited direction so far through the week. A few cattle that sold in Iowa at $174 per cwt Tuesday afternoon is not enough to establish a trend. Focus is more on basis opportunities following the market shift lower in futures trade Tuesday. But packers are likely to cautiously enter the market although bids may not be active until later in the week. Asking prices are still hard to firmly pin down given the futures market shifts. Early futures trade is expected to remain mixed to generally weak with a combination of short-covering and follow-through liquidation stepping into live cattle and feeder cattle trade. Limited volume is expected through most of the morning, limiting overall direction through the midweek session.

Limited early-morning direction is expected to be through the complex Wednesday with the market pullback seen Tuesday creating more questions than answers for traders before markets will open. The focus on follow-through pressure is building momentum, although all nearby lean hog futures have not singled a technical shift lower, and could continue to wander in this sideways range over the near future. It is likely that buyer support will attempt to step back into the market, but it is uncertain if momentum can build. Cash hog markets are expected steady with bids likely 50 cents lower to 50 cents higher. Total slaughter schedules for Wednesday are expected to be around 471,000 head. Saturday runs are expected at 178,000 head.

	BULL SIDE		BEAR SIDE
1)	Underlying cash cattle market support last week is expected to help spark some additional underlying momentum through the rest of the week.	1)	Triple-digit losses seen Tuesday in feeder cattle futures following additional pressure in grain trade is limiting the connection between feeder cattle values and production costs.
2)	Despite the market shift lower, live cattle futures continue to hold onto the firm market support with prices well above support levels and near short-term highs.	2)	October live cattle futures continue to trade at a significant discount to other nearby contracts. This is adding even more uncertainty about follow-through support in the next couple weeks despite underling firm technical factors.
3)	Limited buyer support stepped back into the cash hog trade through the week. This is helping to instill additional firm bids, with the potential of further fundamental support developing in the near future.	3)	Sharp pressure in lean hog futures has quickly created questions of additional liquidation possible through the entire hog complex.
4)	October lean hog futures continue to distance themselves from other nearby contracts. Despite limited activity, continued buyer support moves into spot-month trade.	4)	The inability to spark additional short-term buyer support over the near future, could limit the potential to break through short-term resistance levels of $59.85 per cwt in December futures. This may create a seasonal market cap, creating additional short-term pressure.

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