Tuesday Morning Livestock Market Update - Higher Futures Expected

GENERAL COMMENTS:

Cattle futures may get a boost Tuesday based on the strength of boxed beef on Monday. Choice cuts jumped $4.38 while select increased $3.01. Retail demand over the weekend must have been strong with restocking needing to be done. However, moving live cattle futures out of the sideways trading range may take more than that. Technically, futures are poised to break lower if traders do not increase their buying interest. The early anticipation is for cash cattle to trade lower this week. The packers may not need to be as aggressive as they had purchased cattle ahead the past few weeks. Feeder cattle futures did not make a lower low Monday, but they also failed to hold the early strength, keeping the market in a downtrend.

Hog futures showed another disappointing day as early buying interest failed to follow through. It seems the uncertainty of demand has gripped the market and is not letting go. The morning cash report was not released, which may have added to the uncertainty. However, the National Daily Direct Afternoon Hog report showed cash gaining $1.37 with a weighted average of $89.78. Cutouts indicated good demand with values up $2.67. This combination should provide some buying interest in futures Tuesday. The packers should be aggressive again as they wish to purchase hogs early in the week as usual. Tuesday is the last trading day for April hogs.

	BULL SIDE		BEAR SIDE
1)	The strong boxed beef prices Monday should support the market as traders may believe demand may be better than expected.	1)	Cattle weights remain significantly higher than a year ago leaving more tonnage available with fewer animals.
2)	Live cattle futures bounced from the low end of the trading range which may increase technical buying interest.	2)	Cash cattle are expected to trade lower this week as packers may not be as aggressive due to reduced slaughter.
3)	Hog slaughter remains strong as demand has so far been holding up well. This should keep the packers aggressively purchasing hogs.	3)	The April hog contract goes off the board Tuesday with June holding a $6.00 premium. That may keep a lid on price potential.
4)	Hog futures are oversold and could see short-covering at any time. Stronger cash and cutouts indicating good demand may trigger buying.	4)	The new lows again Monday may keep traders unwilling to buy into the market aggressively, which could result in further liquidation.