Wednesday Morning Livestock Market Update - Cash Cattle May Trade Today

GENERAL COMMENTS:

Cattle futures found strong buying interest as boxed beef prices continued to increase. Strong consumer demand continues to push boxed beef prices higher. Choice gained $1.21 with select up $0.07 on Tuesday's trade. Packers would like to get ahead of the market and improve margins but must also purchase cattle to supply demand. This requires them to be rather aggressive in the cash market. Some cash activity will likely take place Wednesday as Thursday is Independence Day. However, most business was done late Friday last week and this week could be the same. Cattle supplies are tight and will remain that way for quite some time. Consumer demand remains exceptional and is not following the usual decrease in summer.

Hog futures continue to play the guessing game. The packers were not expected to be aggressive this week, but low and behold, they wanted hogs on Tuesday. The National Direct Afternoon Hog report showed cash up $2.91, moving the weighted average to $91.65. However, cutouts struggled with values down $1.09. Futures remain in a sideways trading range with August closing near the top end of the range. Later contracts closed near the bottom of the range. Spread trading was evident with August receiving the benefit of the activity. Packers are not expected to be very aggressive in the cash market Wednesday as a large volume of hogs were purchased Tuesday.

	BULL SIDE		BEAR SIDE
1)	The attitude of traders turned bullish on cash with the anticipation of cash trading no worse than steady this holiday-shortened week.	1)	Beef demand may decrease after the July 4th holiday as summer weather generally impacts beef consumption.
2)	Boxed beef prices continue to increase contra-seasonally, indicating strong consumer demand even though beef is expensive.	2)	Cattle futures have chart gaps below the current market that may be filled over time. Any weakness of cash may increase liquidation and close those gaps.
3)	Hog futures remain in a sideways range which may indicate a bottom has been reached. Traders may not want to press the downside much further.	3)	Pork cutouts continue to struggle as strong demand remains elusive. Pork has not enjoyed the usual strong demand generally seen in the summer.
4)	Hogs futures are correcting the oversold condition but further correction needs to be done to move the market into a neutral technical condition.	4)	The packers have no difficulty finding hogs to fill their slaughter needs. Plentiful supplies and higher weights leave them less aggressive.