Tuesday Morning Livestock Market Update - Uncertainty May Leave Traders Cautious

GENERAL COMMENTS:

Cattle were under pressure Monday as would have been expected due to the significant increase of corn. However, the pressure was not as great as would have been expected. Even though cash cattle are expected to trade higher again this week, the gains may be not as strong as the past few weeks. This may temper some trader buying exuberance until the level of packer interest is seen. Boxed beef was mixed with choice up $0.39 and select down $0.03. Slaughter pace continues to remain strong, and cattle are needed to keep the pace. One wonders if this beef is moving right to the market or if cold storage is increasing to prepare for a yet tighter cattle supply. This could temper strong buying and cash prices down the road as more beef will be available to the market from inventory.

Hog futures showed spread trading again with nearby months seeing pressure. Later months were surprisingly strong, possibly heading back to challenge the highs. The National Direct Afternoon Hog report showed cash down $2.20. Cash is expected higher Tuesday as packers generally purchase more aggressively earlier in the week. Cutouts continue to struggle in finding any solid support with values down $1.40 Monday. Futures could see a further price correction as the market is overbought, but heavy fund buying last week may temper any significant sell-off.

	BULL SIDE		BEAR SIDE
1)	The gains in corn Monday may have run its course, factoring in the news of Russia not supporting the Black Sea Grain Initiative for the time being. This may allow feeder cattle to regain some losses.	1)	Traders may remain cautious until cash cattle trade this week. It is uncertain how much more packers will be willing to pay.
2)	Slaughter pace remains strong and packers will need to pay up to get them again this week.	2)	If grain prices trend higher in response to the developments impacting grain shipments from the Ukraine, feedlots may be willing to move cattle more readily.
3)	Traders remain more bullish to deferred hog futures with contracts possibly challenging the contract highs.	3)	The current availability of market-ready hogs may keep a lid on price potential now that the market has eliminated the huge losses from September.
4)	Packer should step up to the plate more aggressively Tuesday in the effort to purchase for a stronger slaughter pace.	4)	Pork cutouts have been unable to find support and trend higher. Strong slaughter keeps the market well supplied.