Tuesday Morning Livestock Market Update - Hogs and Pigs Report Estimates

GENERAL COMMENTS:

Cattle futures traded the neutral to slightly negative Cattle on Feed report Monday, resulting in mixed live cattle and lower feeder cattle futures. The report was positive compared to the previous year with tighter cattle numbers, but slightly negative due to actual numbers compared to estimates. The numbers compared to a year ago are what is more important, longer term. Packers may not be too aggressive this week as they bought quite a few last week, but they will need to try and keep ahead. No less than steady cash is expected. Boxed beef prices were mixed with choice down $1.85 and select up $0.02. The storage report showed total beef supply at 421.6 million pounds, up 11.2 million pounds from July, but 18% below a year ago.

Hog futures were able to push into positive territory for the day. Support did not come from cash as the National Direct Afternoon Hog price was down $0.05. It is likely packers may be more aggressive Tuesday, as they generally are. The gain of $1.60 in cutouts Monday should provide some support Tuesday. Hower, traders will be turning their attention to the Hogs & Pigs report to be released Thursday. The average estimate for all hogs and pigs is down 0.7% from a year ago at 73.6 million head and the lowest since 2017. Marketings are estimated at 67.6 million head, down 0.6% from a year ago, also the lowest since 2017. Hogs kept for breeding are estimated to be down 1.5% at 6.1 million head. The Cold Storage report showed pork supply up 327,000 pounds from July, but 13% below a year ago at 471.1 million pounds. Belly stocks were down 14.3 million pounds at 36.9 million pounds, up 3% from a year ago.

	BULL SIDE		BEAR SIDE
1)	Cattle futures held Monday and are poised for new highs if cash trades higher this week.	1)	Feeder cattle futures seem to be struggling with a lower low again Monday. Feeder cattle at auctions showed lower cash trade.
2)	Beef in cold storage is down 12% from a year ago, indicating good demand and tighter supply.	2)	Packers may not be very aggressive this week as they were able to purchase some cattle for deferred delivery last week.
3)	Hog futures bounced from support, which may turn traders more aggressive. Stronger cash, higher cutouts, and expected lower numbers on the Hogs & Pigs report may provide support.	3)	The inability of hog futures to hold the highs Monday may mean traders are cautious to buy back into the market.
4)	Pork exports for the first seven months of the year are up 8.9% compared to the same period last year, while pork imports were down 21.7%.	4)	Hogs are sufficient for packers' needs, leaving them less aggressive in the cash market.