Wednesday Morning Livestock Market Update - Trader Uncertainty Expected to Continue

GENERAL COMMENTS:

Live futures held support Tuesday, keeping the market in a trading range. The direction of cash this week is anyone's guess, but steady money may be the likely outcome. Boxed beef declined Tuesday with choice down $2.36 and select down $1.35. This should not be a concern after the strength seen recently, but it may indicate retail demand has been refilled with prices choppy. The fact that cattle supplies remain tight should continue to support the market, but that support may be without moving back to contract highs and might be at lower price levels than currently seen. Feeder cattle exhibited bull-spreading Tuesday as it was a less risky way to be in the market for the time being. Prices paid for feeder cattle compared to last week are mixed.

Hogs showed the most pressure in the December contract as traders seem to be disillusioned over continued price strength. The National Direct Afternoon Hog report showed cash down $0.85. Cutouts were unable to provide support with a decline of $1.99. This may carry over into Wednesday, putting some pressure on the market. October did not see much movement as it winds down, with the last trading day for the contract Friday.

	BULL SIDE		BEAR SIDE
1)	Live cattle are holding recent support and the sideways trading pattern. This may indicate price may not see further declines under current fundamentals.	1)	Cattle futures have been unable to rebound after the recent decline. The longer it remains here, the more difficult it becomes to trend higher.
2)	Cattle supplies remain tight and this is not going to change anytime soon. It will take some time to rebuild the cattle herd.	2)	World events, uncertain financial markets, and the possibility of increased interest rates may have a negative influence on the market.
3)	It seems hog futures have much of the bearish news factored in. This may keep futures in a range and supported near current levels.	3)	Hogs are unable to find solid cash support to keep prices trending higher. Futures may remain choppy.
4)	Packers were aggressive with purchases Tuesday even though cash was lower. They may need to bid higher to obtain what they need Wednesday. Increased export business may have surfaced.	4)	Pork demand has yet to increase significantly despite the decrease in beef demand seen over the past month. Supply remains plentiful.