Tuesday Morning Livestock Market Update - Traders Take a Wait-and-See Attitude

GENERAL COMMENTS:

Cash cattle were not expected to trade Monday and the holiday-shortened week will keep traders guessing about cash prices. The packers could commit 28% on last week's purchases for deferred delivery. That may limit their aggressiveness this week, keeping traders cautious even though cattle supplies remain tight. Boxed beef prices continue to trend higher with choice cuts gaining $2.86 and select gaining $1.19 on strong demand. Feeder cattle suffered triple-digit losses and the third consecutive day of price weakness. The September and later contracts closed below technical support, opening the way for further weakness. Feeder cattle prices have recently been variable at auctions as high prices are finding buyer resistance.

Hog futures tried to rally but ran out of buyers, resulting in the market falling back. The packers were not interested in bidding higher to purchase hogs for the holiday-shortened week as the National Direct Afternoon Hog report showed a decrease of $0.43 with a weighted average price of $88.74. Unfortunately, cutout values fell by $2.48, eliminating most of the gains of Friday and adding to the bearishness. Futures continue to hold support but may be at risk of breaking that support if cash and cutouts remain weak.

	BULL SIDE		BEAR SIDE
1)	Packers may not need to be aggressive this week, but feedlots are current and supplies remain tight.	1)	Traders anticipate cash to trade no better than steady with last week as packers will not be as aggressive in procuring cattle this week.
2)	Both live and dressed weekly weighted average prices set a new record again last week. Demand remains strong and packers need to meet that demand.	2)	Feeder cattle futures moved through and closed below technical support on Monday, opening the way for further selling if cash cattle are unable to trade higher.
3)	Hog futures have maintained support, remaining in the recent sideways pattern. Traders may not want to press the market much more to the downside.	3)	Hog futures are bouncing near the lows but have not been able to find sustained buying interest. Lower cash and cutouts could result in new lows.
4)	Hog futures have corrected from the oversold condition to some extent but continue to remain oversold. Short-covering could take place during the holiday period.	4)	Hog slaughter will be reduced this week with higher weights leaving a plentiful pork supply available to packers.