Wednesday Morning Livestock Market Update - Uptrend May Be Slowing

General Comments:

Live cattle futures failed to the upside with April and June closing lower. The large premium of futures to cash may have an impact even if cash trades higher again this week. There is some, indicating packers will be raising bids in order to get the cattle they need, but futures may already have this factored in. Boxed beef prices being lackluster may indicate price has moved high enough to begin to slow demand. However, one or two days of lower boxed beef does not mean much overall, but it could be a signal. The World Agricultural Supply and Demand report does not indicate that feed prices will be much cheaper anytime soon and cattle need to be feed. Bitter cold weather may reduce cattle movement, but it will also impact weight gains, or should I say, the lack thereof. Business is not expected Wednesday but bids and offers might begin to show.

Hog futures showed a similar pattern as cattle with closer months unable to close in positive territory with the exception of February. The February contract only has three days remaining for trading and will remain close to cash. Cash increased quite nicely Tuesday as packers purchased hogs as much as $3.48 higher. That may be hard to top the rest of this week. But with cutouts continuing to post positive gains, it will be difficult to make a bearish case for the market. December exports to China were down about 100 million pounds from May 2020, but much of this was made up with increased exports to other countries

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	BULL SIDE		BEAR SIDE
1)	Higher cash is expected with some preliminary bids indicating packers are willing to pay up for supply.	1)	The failure of live cattle futures to hold their highs may trigger increased selling as traders may be getting nervous at current prices.
2)	Beef demand remains strong keeping supply from increasing despite higher weights. There is little to suggest the market is running out of steam.	2)	The World Agricultural Supply and Demand report Tuesday indicates higher grain prices will not go away for a while, making it more difficult to hold market-ready cattle for higher prices.
3)	Hog futures remain in an uptrend despite some months closing lower Tuesday. Traders may view a dip in price as a buying opportunity.	3)	Pork may be reaching a level at which it may begin to curtail demand. Cutouts may begin to falter, which would trigger selling of futures contracts, especially in an extremely overbought market.
4)	Packers bidding higher along with strong cutouts should continue to provide price support keeping the trend intact. April pork cutout futures closed at $87.12 Tuesday as traders anticipate further gains.	4)	Packers may not be as generous the rest of the week with cash after the aggressive buying Tuesday. Hogs will need to be marketed and holding for higher prices may not be profitable.