Wednesday Morning Livestock Market Update - Cash Trade Needed for Further Direction

GENERAL COMMENTS:

The trading ranges in cattle Tuesday were fairly tight as traders did not have much to go on to provide market direction. There were a few cattle traded Tuesday but no reported prices to speak of and not enough to determine prices for the week. It is likely more trade may surface Wednesday due to packers needing cattle. Feedlots are expected to hold out until they are able to receive at least $2.00 more than last week. Boxed beef prices were mixed with choice down $0.85 and select up $2.20. The World Agricultural Supply and Demand report did not provide much as a market mover, but it did show an increase of $1.00 for the fourth quarter steer price compared to last month to average $128. Beef production was raised 53 million pounds with imports increased 73 million pounds and exports increased 41 million pounds. Beef exports are forecast to show an increase of 17.1% for the year.

Hog futures cannot find support from underlying cash. The price on the National Direct Afternoon report was down $0.37. On top of this, cutouts fell significantly, posting a decline of $2.31. Slower chain speed is keeping hogs backed up to some extent giving packers the ability to continue to purchase hogs without having to bid higher. Yet, pork price at the retail level as strong with bacon prices up 40% over a year ago and expected to see a further increase next year. The World Agricultural Supply and Demand report did provide a positive outlook as fourth quarter barrow and gilt price was reduced $8.00 to an estimated average of $57.00. Pork imports were raised 38 million pounds while exports were reduced 6 million pounds.

	BULL SIDE		BEAR SIDE
1)	Cash trade has yet to be established, but feedlots are expected to hold tight with higher offers.	1)	Traders have not been too excited over potential higher cash and choose to wait until it is confirmed. If their expectations are not met, futures may not move much.
2)	The trend is up and little reason for bearishness to cause a market sell-off. Tighter cattle supplies are expected to surface through the end of the year.	2)	Boxed beef prices remain choppy potentially leaving packers unwilling to pay much more for cattle.
3)	December and February have closed chart gaps while April is holding an island-bottom formation. Technical traders may be willing to buy into the market.	3)	Current hog fundamentals remain bearish with both cash and cutouts unable to find a bottom.
4)	USDA estimates per capita consumption of pork to increase 0.2 pounds from their previous estimate reaching 57 pounds in 2022.	4)	Hogs remain in plentiful supply due to sufficient numbers and slower chain speeds. This keeps hogs backed up in the market and readily available.