Tuesday Morning Livestock Market Update - Futures May Remain Supported

GENERAL COMMENTS:

Cattle futures were much stronger earlier Monday as traders were aggressive at the opening in anticipation of steady to better cash this week. The bloom came out of the market as Monday progressed. Futures closed higher but well off the highs. There was no cash activity, leaving traders anticipating what the market would do. It will be interesting to see how cash trade will develop this week as it is the week prior to the holiday and it is the week of the Cattle on Feed report. Traders may not want to be very exposed in the market moving into the report and then a three-day weekend. Boxed beef just cannot seem to find consistent support with choice down $2.71 and select up $2.90.

Hogs were in a tug-of-war Monday, ending up closing mostly higher in later months. February and March closed slightly lower as there was some light spread trading. Hogs continue to face some uncertainty in the market and are having difficulty finding solid support. The National Direct Afternoon Hog report showed cash up $0.40 with the weighted average at $48.39. Cutouts were down $0.36 with ribs down $5.07 and picnics up $4.11. Along with the uncertainty of prices and demand, the Quarterly Hogs and Pigs report will be released Friday. This may leave trading subdued as the week progresses.

	BULL SIDE		BEAR SIDE
1)	There is a strong chance cash cattle will trade at least steady this week which would provide support to futures.	1)	A chart gap was left on the open in the April and June live cattle contracts and was not closed. This gap may be closed.
2)	Feeder cattle futures pushed above chart resistance Monday but could not close above that level. A close above resistance could trigger strong buying interest.	2)	Boxed beef prices continue to remain mixed. Demand has been less than desired, leaving traders cautious.
3)	Packers may be more aggressive with their hog purchases early in the week as they may want to procure the desired number of hogs. This may move cash prices higher again Tuesday.	3)	Hog supplies are plentiful, limiting upside cash potential as packers do not need to be aggressive.
4)	Hog futures pushed above chart resistance but could not close there. A close above that level could trigger further technical buying interest.	4)	Low pork prices have yet to stimulate increased demand. Much of the retail orders for pork through the end of the year have been placed.