GENERAL COMMENTS:
Cattle futures tried to push higher Monday with traders more aggressive at the beginning of trade, but there was uncertainty over whether cash could see further gains this week. Traders are looking at a shorter trading week as the markets will be closed Wednesday for the federal Juneteenth holiday. Traders will also be thinking about the Cattle on Feed report set for Friday. The market is supported, leaving limited downside potential. There were new weekly weighted average highs for both the live and dressed categories last week, indicating the incredible strength the market is exhibiting. Boxed beef prices advanced with choice up $0.58 and select up $1.01. Feeder cattle futures followed a similar pattern with nearby contracts slightly lower and closing nearly $1.50 off their highs. Later contracts closed slightly higher
Hog futures followed through posting triple-digit gains in the three nearby contracts and higher closes in all contracts. Short-covering is finally taking place in the extremely oversold market. How far that will carry the market is uncertain as the strength Monday was not the result of market fundamentals. Cash prices were not released due to packer confidentially and cutouts fell $2.41, eliminating about half of Friday's gain. The short-covering might be short-lived unless further strength is seen in cash and cutouts.
| BULL SIDE | BEAR SIDE | ||
| 1) | Boxed beef prices continue to increase, indicating demand remains strong. Consumers may not reduce consumption as much as anticipated during the summer months. |
1) | Beef demand generally slows during the hot days of summer. Boxed beef prices may reflect that over the next few weeks. |
| 2) | New weekly weighted average highs for live and dressed categories may continue as cattle supplies remain tight. |
2) | Packers will not be willing to bid up for cattle this week and may wait until after the Cattle on Feed report before doing much business. |
| 3) | Hog futures may have just begun the short-covering phase with further strength unfolding as prices increase and stops are triggered. |
3) | The weakness of pork cutouts Monday indicates the market may not be ready to trend higher. Futures will not continue higher without underlying support. |
| 4) | The July hog contract nearly closed the chart gap remaining from June 4. That gap may be closed sooner rather than later. |
4) | Hogs are readily available between domestic supplies and what is coming from Canada. The packers have plenty to choose from at higher weights than last year. . |
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