Tuesday Morning Livestock Market Update - Cattle May Struggle to Move Higher

GENERAL COMMENTS:

Traders thought cattle were overdone Friday with aggressive buying propelling the market higher Monday. Fundamentals did not change over the weekend, leaving the activity more technically driven. No cash cattle traded and boxed beef did not perform exceptionally well. Boxed beef prices were mixed with choice up $0.31 with select down $4.20. The large decline in select cuts is not good and may limit upside price potential. Cash is projected to be lower again this week. The Cattle on Feed report will be released Friday. The trade estimates are for on-feed numbers April 1 at 102% of a year ago. Placements in March are expected at 92.1% with marketings at 88.2% of a year ago.

Hogs just could not find solid footing with spread trading supporting May and June with weakness in later contracts. The National Daily Direct Afternoon report showed cash down $0.89 with a weighted price of $85.71. Cutouts shined Monday with a gain of $2.40. Strong slaughter should bring the packers to the table more aggressively Tuesday. Futures have corrected from being overbought with traders now wanting to see continued support from demand.

	BULL SIDE		BEAR SIDE
1)	The cattle market may be overdone to the downside and may see renewed buying at these lower prices. Cattle numbers remain tight.	1)	Cattle futures may be carving out a sideways trading range at best and may have a difficult time breaking above the range.
2)	Cash cattle may firm up as the week progresses. Trade at least at steady money with last week may increase buying interest due to the discount to cash.	2)	The large decline in select boxed beef Monday may renew the negative tone today.
3)	Higher cutouts Monday indicate strong domestic demand. International demand is also improving.	3)	Continued concern over the impact of inflation on consumer purchasing of pork may keep traders cautious.
4)	Higher slaughter rates should keep packers aggressive as they need to bid up to obtain the hogs they need.	4)	Hog slaughter continues to increase; however, there are sufficient hogs to continue to supply the demand. This may leave the packers less aggressive.