Tuesday Morning Livestock Market Update - India to Allow Imports of Pork and Pork Products

GENERAL COMMENTS:

Cattle came under pressure as traders are concerned over the slaughter pace. Packers would like to purchase more cattle to run higher chain speeds, but the disruption of the workforce is prohibiting it. Feedlots would like to move market-ready cattle rather than hold them and continue to feed them with high priced corn. The result is expected to be lower cash this week with estimates of $1.00 to $2.00 lower. Packers have been able to purchase cattle for deferred delivery, which increases some of the negativity of the market. Demand continues to remain strong with boxed beef prices significantly higher. Choice cuts gained $4.22 with select up $5.40. The Commitment of Traders report showed funds as net buyer of 2,744 contracts moving their net long positions to 72,346.

Hog futures plummeted for the second consecutive day, eliminating most of the gains since the week before Christmas. The bullishness of cash strength last week came to an abrupt halt. Hogs are current in the country, but slower slaughter pace is an increasing concern. The National Direct Afternoon report showed cash down $1.06. Cutouts were higher with a gain of $0.52. Good news came from the announcement of a new trade agreement with India. India has agreed to allow the imports of pork and pork products, which has been nearly two decades in the making. This could be a very significant market for pork and pork products. There is no specific timing for this to take place, but work is being done to get this moving as soon as possible. The Commitment of Traders report showed funds net sellers of 2,046 contracts, bringing their net long positions to 55,674.

	BULL SIDE		BEAR SIDE
1)	Demand remains strong, which will require packers to process as many cattle as possible despite the disruptions in the workforce.	1)	Cattle may be backing up in the country. resulting in heavier weights and less aggressive purchasing on the part of packers.
2)	Boxed beef prices continue to increase as consumers want beef and are willing to pay up for it.	2)	Packers are able to continue to purchase for deferred delivery. This, along with slower chain speed, will allow them to pay less for cattle in the near term.
3)	Hog marketings are current, which should limit cash weakness.	3)	The weakness of hog futures will be difficult to overcome as some technical damage has been done. Technical traders may not be so apt to buy back in anytime soon.
4)	India agreeing to import pork and pork products will increase the demand for pork to the export market.	4)	Slower chain speed may eventually back up supplies into the country leaving packers less aggressive.