Tuesday Morning Livestock Market Update - Mixed Trading Activity Expected

GENERAL COMMENTS:

The cattle complex suffered triple-digit losses with even the slight weakness of corn not able to cause buying interest. Traders are a bit concerned over just how much packers will reduce slaughter to improve margins. But even with reduced slaughter, boxed beef continues to struggle with choice down $0.30 and select down $1.47 Monday. Even with a lower number of cattle being purchased, packers continue to purchase some for deferred delivery. However, that has not yet given them the upper hand as they had to pay up for them last week. There is a good possibility cash might again be higher this week, but even steady money will be a victory. Feeder cattle futures in October and later months made new contract highs Monday but failed miserably after early strength.

Hogs seemed to move higher as cattle moved lower. Cash uncertainty early in the day seemed to support the market as traders had to guess what cash was doing. In the end, cash was lower on the National Direct Afternoon Hog report with a loss of $2.25. On the bright side, cutouts were higher with a gain of $1.62. Which one the trade will focus on today is uncertain. Generally, trade will be influenced more by cutouts. Stronger cutouts may result in packers needing to step up and purchase more aggressively Tuesday.

	BULL SIDE		BEAR SIDE
1)	Traders may view the weakness of cattle Monday as a buying opportunity due to lower corn overnight and the potential for steady to higher cash.	1)	Boxed beef continues to struggle, even though packers have reduced slaughter. High beef prices may be slowing demand.
2)	Feedlots will likely hold to the end of the week again as that has been working to gain higher prices. Current showlists are mixed without an abundance of cattle.	2)	Traders may take a wait-and-see attitude until cash trading takes place, leaving the market drifting until then.
3)	Hog futures bounced back, moving futures solidly back into the upper end of the trading range. A move above the range could increase buying interest.	3)	Hog futures may have a difficult time moving above the range and trending higher demand uncertainty through the end of the year remains.
4)	Strong cutouts Monday indicated good demand. Packers may be more aggressive Tuesday as they look to obtain the hogs they need to meet the demand.	4)	Lower cash Monday may have an influence on the strength of futures today. The upside might be limited.