GENERAL COMMENTS:
Live cattle continue to trade in a range. There is overall optimism prices will increase over time, but fundamentals will need to provide further support to the market before futures break out to the upside. Boxed beef continues to be supported with choice up $1.17 and select up $0.72 on Tuesday. However, that will need to be supported by stronger cash trade this week or futures may remain rangebound. The April contract already has higher cash factored in. Feedlots have posted asking prices in the South at higher prices, but bids have not been posted. Packers will try to hold the line this week after paying more for cattle last week. Feeder cattle futures were higher but have developed a slight downtrend.
Hog futures finally unwound some of the bear spreading that was prominent last week resulting in April through June contracts posting triple-digit gains. Stronger cash was anticipated Tuesday and that is what the market received. The National Daily Direct Afternoon Hog report showed a gain of $1.19, moving the weighted average to $77.35 on good volume of hogs purchased. Futures rejected the early lows as traders liked what they saw in the cash market and unwound some of their spreads. Cash is expected to show another increase Wednesday. The anchor might be the decrease in cutouts of $1.04. However, traders seem to be focusing more on cash.
| BULL SIDE | BEAR SIDE | ||
| 1) | Live cattle futures remain sideways as traders wait for longer-term price direction. Futures continue to build support. |
1) | Live cattle have been unable to break out of their sideways trading range with traders cautious over cash price strength this week. |
| 2) | Boxed beef prices are increasing as slower slaughter improves prices. Consumer demand continues to remain strong. |
2) | Feeder cattle futures have been developing a downtrend with the high prices of feeder cattle finding some buyer resistance in the country. |
| 3) | Improving hog prices indicate both domestic and international demand remains strong. Packers continue to remain aggressive with slaughter. |
3) | Pork cutouts continue to remain variable with domestic demand not consistent. |
| 4) | There could be further unwinding of spreads Wednesday, supporting nearby contracts and resuming the uptrend. June hogs posted the highest close since January 2023. |
4) | Hog futures remain overbought and may need to see a larger price correction or at least a sideways trading pattern for a time to correct the overbought technical status. |
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