Tuesday Morning Livestock Market Update - Traders Remain Cautious

GENERAL COMMENTS:

Live cattle futures moved similarly as they had for much of last week. Futures closed mixed despite the idea that cash might trade higher this week. There were no bids or offers placed, but showlists were distributed and did not show an abundance of cattle for sale. But until cash trade takes place, traders seem comfortable with holding positions and not anticipating price direction. They are taking a wait-n-see attitude. Inflation is driving up beef prices at the retail level, which may slow demand. Packers are assessing how much impact this will have in the near term. Lower boxed beef prices may indicate the impact is taking place with choice down $1.10 and select down $2.25. The Commitment of Traders report showed funds increasing their longs by 7,309 contracts to a net-long of 49,203 contracts.

Hogs continue to show some support despite lower cash and cutouts again. Lower cash seems to be a broken record as it has nearly been a daily occurrence. The National Direct Afternoon report showed the average price down $0.54. Cutouts again struggled with a decline of $0.78. Packers continue to have access to plentiful supply of hogs for the near term and are able to purchase at lower prices as those hogs need to move to the market. Yet, it seems traders are looking past the end of the year and the potential for supply to come in line with demand. The Commitment of Traders showed funds reducing their long positions by 1,028 to a net-long position of 44,937 contracts.

	BULL SIDE		BEAR SIDE
1)	Cattle futures continue to hold the uptrend but have been struggling to move higher despite the potential for higher cash.	1)	Cattle futures have been unable to move higher lately as traders are not anticipating higher cash but will wait until they see it.
2)	Packers not having few cattle contracted for later delivery, requires them to be aggressive in the cash market. Feedlots will increase offer this week.	2)	Lower boxed beef might be an indication of demand slowing due to consumers having sticker shock over high retail prices.
3)	Traders seem to have a desire to support the hog market in the anticipation demand may improve through the end of the year as consumers may switch from higher priced beef.	3)	Hog futures are feeling a strong headwind as cash and cutouts continue to slide.
4)	Packers may push more this week to purchase hogs due to the Thanksgiving holiday next week. This may make them more aggressive to purchase ahead.	4)	The holiday week will see fewer hogs processed, which could result in higher weights as there is some backup of supply.