Wednesday Morning Livestock Market Update - Traders Wait for Cash Cattle to Trade

GENERAL COMMENTS:

Trading activity was a bit disappointing for cattle as the Cattle on Feed report was expected to provide further strength than just one day. However, there should be good support under the market as cattle numbers tighten. Packers will need to take care of business Wednesday as they do not have many purchased ahead. Feedlots want higher cash but also want to move cattle that are ready to sell. The anticipation is for higher cash, but traders are cautious and want to see evidence of it before pushing futures higher. Boxed beef was higher with choice up $1.06 and select up $0.95. The October Cold Storage report showed beef supply up 8% from a year ago but this should not have a bearish influence on the market. Thinner trading activity ahead of the holiday might result in futures closing the chart gaps left on Monday.

Hogs saw another day of higher cash with the National Direct Afternoon Hog report posting a gain of $3.14. Even with stronger cash, aggressive buying was not triggered in futures. Cutouts continued to struggle with a loss of $0.69. Even though it seems hog supplies are current, there remain sufficient hogs available for increased chain speeds. The October Cold Storage report was not bullish as frozen pork stocks grew 16% from a year ago with belly stocks up 246% from a year ago. Not only is demand being met but inventory is growing. Packers will need to finish up business for the week, which could leave them somewhat aggressive Wednesday. The markets will be closed Thursday and reopen again on Friday.

	BULL SIDE		BEAR SIDE
1)	Packers will need to do business Wednesday and might be aggressive as they do not have many cattle contracted ahead.	1)	Cattle futures failed to push higher Tuesday and did not close the chart gaps below the market. Gaps may be closed Wednesday.
2)	Reduced trader participation in the market Wednesday might allow futures to move higher in anticipation of higher cash and bullishness from the Cattle on Feed report.	2)	Cash is anticipated to be higher this week. If cattle trade steady, traders will be sellers in a thinly traded market which could magnify price movement.
3)	July, August, and October hog futures continue to trend higher, making another new high again Tuesday. Traders seem confident about higher prices to come.	3)	Pork cutouts continue to struggle, unable to find solid support.
4)	Hog slaughter pace remains strong as competitive prices keep demand higher for pork. Demand is generally strong at this time of year.	4)	Packers have no difficulty finding sufficient hogs for the increased slaughter pace. They may not be aggressive Wednesday due to a holiday-shortened week.