Tuesday Morning Livestock Market Update - Futures Expected to Hold Gains

GENERAL COMMENTS:

Cattle showed strong gains Monday even though cash had not yet traded. Lower corn futures provided the catalyst traders needed to buy aggressively for at least a short-term trade. Further discovery of the highly pathogenic avian flu in a quarter of U.S. states may be providing some support as well, as it could have a positive impact on beef demand if it continues to flourish. Most cases are in backyard flocks at the present time with a few commercial flocks affected. However, the greater issue being faced may be inflation and its impact on demand. There is hope that higher cattle futures may translate over into at least steady cash. Boxed beef showed further gains with choice up $0.80 and select up $0.83. The Commitment of Traders report showed funds reducing their long futures positions 20,851 contracts to a net long of 36,6356 contracts.

Hog futures did not move higher in concert. April and December and later contracts posted losses while June was the star of the day with the only triple-digit gain. Some spread trading was evident with traders favoring the summer months. Cash was higher on the National Direct Afternoon report with a gain of $0.63 providing a good start to the week. Cutout values increased $0.64. Packers may be aggressive again Tuesday as they want to procure supplies earlier rather than later. The Commitment of Traders report showed funds as 8,487 futures bringing their net longs positions to 66,019 contracts.

	BULL SIDE		BEAR SIDE
1)	The strong move in futures and the close above chart price resistance along with weaker grain futures could push futures higher.	1)	Packers have some cattle purchased ahead and may not be very willing to purchase cattle except at lower prices.
2)	The anticipation is for cash cattle may be no worse that steady with last week. This could provide traders with the confidence they need to buy into the market.	2)	Feedlots may want to move cattle even though corn futures are lower. Lower corn futures for a day or two does not have much impact on feed prices.
3)	Hog futures have rebounded nicely in June and later contracts and are poised to retest contract highs.	3)	Pork has entered a slower demand period of the year, which may limit price potential for the April contract.
4)	Stronger cash to begin the week is always a good sign that packers remain aggressive wanting to buy hogs sooner rather than later.	4)	Cash will need to move higher Tuesday or hog futures could fall back again. There seem to be sufficient supplies available for slaughter schedules.