Tuesday Morning Livestock Market Update - Traders Unable to Find Solid Support

GENERAL COMMENTS:

There had been some expectation cattle would trade higher Monday after the numbers on the Cattle on Feed report showed a significant decline compared to last year. However, the report was anticipated, resulting in disappointing trading activity as the day progressed. With mixed showlists this week and a fair percentage of cattle purchased last week for deferred delivery, even though cash was $1.00 lower, it puts packers in a stronger position. The discount of futures to cash seems to indicate traders think cash will be at best steady or possibly lower again this week. Boxed beef prices were mixed with choice down $2.33 and select up $1.50. Feeder cattle follow a similar pattern as live cattle did, closing lower in contracts through October.

Hog futures tried to move higher after a dismal opening. The result was an inside trading day as traders assessed market fundamentals. Lower cash and cutouts on Friday impacted trading activity. Cash was again lower Monday with the National Direct Afternoon Hog report showing a decline of $1.15 while cutouts found some strength, posting a gain of $0.69. Traders may need to see some consecutive days of higher cutouts to provide the confidence to be more aggressive buyers of futures, but it could provide some support Tuesday.

	BULL SIDE		BEAR SIDE
1)	April live cattle and March feeder cattle futures have charts gaps to the upside that may be filled.	1)	Cattle have not been able find support after the Cattle on Feed report. Traders are focusing on cash.
2)	April live cattle hold a discount to cash. Steady or higher cash trade this week could result in futures adjusting higher.	2)	Boxed beef is not finding consistent support possible, indicating some resistance to beef prices.
3)	Hog futures may be overdone to the downside, which could increase buying interest if cutouts stabilize.	3)	Hog weights increased 1.2 pounds on the latest report, putting average weights at 287.1 pounds. Still below a year ago, but not indicating hog numbers are tightening.
4)	A 50% price retracement would put June hog futures at $96.45, which many times takes place after a decline similar to what was experienced last week.	4)	Traders may not be anxious to buy into the market even though it is oversold. Fundamental support needs to be stronger.