Wednesday Morning Livestock Market Update - USDA Extends Increased Pork Line Speed Trial

GENERAL COMMENTS:

Live cattle settled back a bit in nearer months as traders now want to wait to see the strength of cash. Expectations were strong for higher cash this week, but some expectations waned a little Tuesday. The expectation is for higher cash, but not quite as strong as the past few weeks. Traders will look at the numbers USDA will put out for beef supply and prices on the World Agricultural Supply and Demand (WASDE) report Wednesday, but that in itself may not be a market-mover as the expectation is for higher prices and reduced supply. Boxed beef was mixed Tuesday with choice down $2.27 and select up $1.02. The rest of the week boxed beef may be the greater influence on the market. Feeder cattle made new contract highs Tuesday with April pushing closer to $200.

April hogs spent a brief time in negative territory but traded mostly higher throughout the day, closing with triple-digit gains. Later months spent most of the day in negative territory, making a brief run into positive territory in the last half hour of trade. However, futures were unable to hold and slipped lower into the close. Short covering was triggered but that quickly ran out of buyers. Packers paid more for hogs Tuesday with an average gain of $0.56 on the National Direct Afternoon report. Cutouts did not follow suit with values down $0.31. USDA announced the extension of the increased line processing speeds trial through Nov. 30. The trial was initially for one year and was to end this month.

	BULL SIDE		BEAR SIDE
1)	No cash cattle trade is expected until late in the week, which could push packers into paying higher prices again.	1)	There is some expectation cash cattle trade may be steady with last week rather than much higher.
2)	Feeder cattle made new contract highs with traders confident over continued strength of the cattle market.	2)	Any positive numbers on the WASDE report may have been already factored in.
3)	Hog futures bounced from their lows in late trade as selling ran out and short-covering was triggered.	3)	Hog futures seem like they will move back to the lows as underlying fundamentals keep pressure on the market.
4)	Cash hogs are expected higher Wednesday as packers need to purchase more and will likely be more aggressive today rather than later in the week.	4)	Demand needs to improve to utilize the pork available to the market. Packers have little difficulty obtaining hogs for slaughter, keeping pork supply plentiful.