Wednesday Morning Livestock Market Update - Follow-Through Selling Anticipated

GENERAL COMMENTS:

Feeder cattle came under severe pressure as there was a lack of bullish news. The focus turned to talk the Fed will likely raise interest rates before the end of the year. That will make it more expensive to purchase and own cattle until they are ready for the market. The other concern Tuesday was the strong possibility of a government shutdown next week. That could hinder the release of much-needed reports the agricultural industry relies on. The November feeder cattle contracts posted the largest one-day decline in the life of the contract. Further liquidation could follow Wednesday as long liquidation may continue. Live cattle showed triple-digit losses, falling below technical support. Feedlots may have a difficult time obtaining higher cash for cattle this week. Limited cattle trade developed Tuesday at $290 in Iowa. Boxed beef prices were lower with choice down $1.94 and select down $1.35.

Hogs closed mixed with December through July contracts slightly lower while surrounding contract were higher. Futures did not succumb to spillover pressure from cattle. The National Direct Afternoon Hog report showed cash down $0.66. Cutouts were down $0.58. Packers may be a bit more aggressive Wednesday to get more hogs on the books for the week. Traders may just let the market coast until the Quarterly Hogs & Pigs report on Thursday. The average estimate for all hogs and pigs is to be down 0.7% from a year ago at 73.6 million head, 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.

	BULL SIDE		BEAR SIDE
1)	Tight supplies of cattle did not change, leaving the action Tuesday likely a much-needed price correction in a bullish market. Traders may buy back into the market.	1)	The large decline in cattle futures Tuesday could result in further liquidation as fund selling generally lasts 2 to 3 days.
2)	Even though there might be a government shutdown that could impact reporting, packers will still need to purchase cattle as business will continue to be done and consumer demand will need to be met.	2)	Choice boxed beef closed below $300, which has been an area of psychological support. Possible higher interest rates may have an impact on demand.
3)	Hog futures held support Tuesday, which could increase buying interest from traders anticipating a rebound.	3)	Hogs held support but could not uncover strong buyer interest. Futures may drift ahead of the Hogs & Pigs report.
4)	Packers are expected to show more interest Wednesday, which should support the cash market.	4)	Pork cutouts just cannot find consistent support. Demand remains variable and supply remains sufficient.