Tuesday Morning Livestock Market Update - Strength Expected to Continue

General Comments:

Live cattle futures performed well again Monday with contracts posting another higher high and higher low. Futures pushed through to new highs again with April at the highest level since Jan. 21, 2020. The anticipation of increased beef demand as restaurants reopen or increase capacity following strict rules, will keep support under the market. This may not actually increase demand as some might be switched from at-home beef consumption to away from home beef consumption. However, the perception is strong and friendly to the market. Packers or feedlots did not post any bids or offers, preferring rather to get a feel for the market. Feedlots most likely will be asking higher prices due to strong futures prices and decent boxed beef prices. However, some spillover pressures from feeder cattle could impact the market along with ever increasing grain prices. Feedlots will be asking themselves whether holding out for higher cash is making money, or if it is being spent on higher feed, accomplishing nothing.

Hog futures continued their march higher, posting a similar chart pattern as cattle with higher highs and higher lows. This positive chart action along with new contract highs keeps traders stimulated and willing to add to their long positions. Cutout were higher on good demand. Consumers want to purchase meat and pork because it is still a great buy. The Commitment of Traders report showed funds were net buyers of 8,206 contracts, adding to their positions now totaling 51,353. Traders are friendly to the market and as long as underlying fundamentals provide support higher price should unfold.

	BULL SIDE		BEAR SIDE
1)	New highs again Monday in live cattle futures will keep traders interested in buying. There is anticipation of higher cash again this week.	1)	Packers may be less likely to give in to higher cash this week as they know the cattle are out there and need to come to the market.
2)	Demand is good and feedlots feel confident packers will need the cattle. They will hold out as they are expecting to squeeze at least another dollar out of them.	2)	Increasing feed costs may increase the desire of feedlots to move cattle rather than feed them longer than necessary. Holding cattle may not net any benefit.
3)	Hog futures continue to move higher, bringing more traders in to take advantage of the strength.	3)	Hog futures are overbought with any minor weakness of cash or lower cutouts potentially triggering some profit-taking.
4)	Export demand remains strong despite the concern over China eventually reducing imports. That may take longer than expected as they are still dealing with disease issues, which is slowing herd rebuilding.	4)	Higher cutout prices may begin to curtail demand as consumers may shift to less expensive alternatives.