Tuesday Morning Livestock Market Update - Futures Expected to be Choppy

GENERAL COMMENTS:

Today is the last day to trade the April live cattle contract. June will take over, posting an $8.00 lower price as traders anticipate cash weakness over the next two months. There has been greater concern developing over demand through the summer months but that remains to be seen. Even though cattle numbers may be tight and heifer retention has not been taking place to any great extent, lower demand will impact prices. Packers will hold the line on chain speed to improve margins and keep supply in line with demand. Feedlots may have difficulty getting more money out of packers this week. Boxed beef prices were higher on Monday with choice up $0.39 and select up $1.49.

Hogs moved to new lows for the move but as the liquidation pressure subsided, buying interest surfaced. Futures bounced off support, which could follow through Tuesday. The packers were not aggressive Monday with the National Direct Afternoon Hog report showing cash down $0.75 with the weighted average at $89.63. This was offset by cutouts gaining $1.37. There is some concern over ongoing demand, but traders anticipate higher prices through the summer. The slaughter pace remains strong, which should keep packers purchasing hogs aggressively.

	BULL SIDE		BEAR SIDE
1)	Higher boxed beef prices indicate demand is holding and should keep packers interested in paying at now less-than-steady money.	1)	The packers purchased a fair amount of cattle last week for deferred delivery, which may leave them less aggressive this week.
2)	The large discount of $8.00 in the June contract may be too much and will move closer to the April price as it takes over as the front month.	2)	Traders anticipate further price weakness through the summer as cattle futures prices indicate.
3)	Hog futures bounced off support Monday, which could increase the buying interest of technical traders and push futures higher.	3)	Hog futures already have a premium in the summer contract months, possibly leaving little upside price potential for contracts.
4)	Packers are expected to be more aggressive Tuesday as they look to procure the hogs they need for the week and maintain the strong slaughter pace.	4)	Hog futures may establish a sideways trading range with price fluctuations confined to the range in the near term.