Wednesday Morning Livestock Market Summary - Cattle Gains Expected Early Wednesday

GENERAL COMMENTS:

Packer interest is expected to slowly develop through the day Wednesday following a few token bids, which developed late Tuesday at $174 to $176 dressed basis in the North, possibly setting the stage for additional market discussions. It was also reported that a handful of trade was seen in the South at $112 to $114 per cwt. But overall trade seems to be nervous given the shifts in futures trade. At this point, asking prices are generally undefined, which could leave packers focusing early-trade direction and the movement in beef values midweek. Firm buyer support in futures trade is expected to spark renewed underlying support early Wednesday, although the depth of buying activity moving into the complex will be the unanswered question going into the opening bell.

Moderate pressure is expected to once again develop early Wednesday morning with bids expected steady to $1.50 per cwt lower. Although most bids are expected $1 per cwt lower, the focus on developing pork values through the end of the month seems to be the overall driver of the cash market. Futures trade is expected to remain mixed in early trade with a combination of follow-through buyer support in nearby contracts. Other contracts are sparking some midweek positioning attempts given the back and forth market shifts last week. Total slaughter schedules for Wednesday are expected to be around 475,000 head. Saturday runs are expected at 279,000 head.

	BULL SIDE		BEAR SIDE
1)	Sharp late-day buying support through feeder cattle trade is helping to spark renewed support in all cattle trade.	1)	Strong pressure seen Tuesday in boxed beef values is adding additional market pressure to the entire cattle complex. Despite the potential for firm demand, wholesale prices continue to quickly erode.
2)	Moderate-to-strong beef demand through the end of the year is expected to spark some additional commercial buyer activity the next couple of trading sessions.	2)	Despite strong buyer support in feeder cattle futures Tuesday, the complex continues to teeter near support levels, weakening the overall strength of the complex.
3)	Nearby lean hog futures have quickly and aggressively bounced off short-term lows, creating underlying market strength moving into the complex.	3)	Cash hog values continue to erode with limited direction in the entire market. The lack of price gains in the cash complex continues to focus on available hog supplies.
4)	Pork demand continues to remain strong given the continued aggressive production levels in the complex. Nearby gains in lean hog futures could spark additional longer-term support.	4)	Lean hog futures continue to hover in the lower 1/3 of short-term trading ranges, with recent market buying helping to pull prices off of support levels, but creating concerns that additional late-month pressure may quickly redevelop.

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