Tuesday Morning Livestock Market Update - Mixed Futures as Traders Wait for Cash

GENERAL COMMENTS:

Cattle futures rejected the lower opening and traded higher the rest of the day. Traders had positioned themselves ahead of the Cattle on Feed report and traded relative to the perception for the week. Cash is expected to be lower as the packers may not be aggressive. They purchased quite a few cattle for deferred delivery last week leaving them less aggressive this week. Feedlots may decide to sell rather than hold for higher prices that may not materialize. Boxed beef prices were lower with choice down $1.44 and select down $0.27. The weakness of boxed beef does not help the potential for steady or higher cash this week. Feeder cattle at auctions have been bringing lower prices in response to the weakness on the board. This trend may continue in the near term.

Hog futures tried to close in positive territory but the uncertainty over cash held the market back. Cash was not reported at midday leaving traders uncertain. The National Direct Afternoon Hog report showed cash down $0.59. Weakness was expected which kept some pressure on the market. However, the real concern is the fall of cutouts with the afternoon print showing a loss of $4.07. When there is a large loss in cutouts on Monday, prices usually rebound on Tuesday negating most of the losses. Futures did make new highs before slipping back keeping the uptrend intact.

	BULL SIDE		BEAR SIDE
1)	Cattle futures closed higher despite the negative Cattle on Feed report. The market had it already factored in possibly finding further support today.	1)	Cash is expected to be lower again this week as feedlots need to move cattle and may not hold out for another week. Holding out for higher cash has only resulted in selling at lower prices.
2)	Traders may support cattle futures as they wait for cash to trade this week. After all, cash had declined the past 3 weeks and may be at a bottom.	2)	The packers purchased quite a few cattle for deferred delivery last week. that may leave them less aggressive this week or allow them to continue to buy cattle with time.
3)	Hog futures closed lower but made new highs earlier in the day keeping the uptrend intact. This should keep buyers aggressive as they trade with the trend.	3)	Lower cash and the large decline of pork cutouts on Monday may keep pressure on the market today.
4)	Packers are expected to be more aggressive in the cash market today as they need to purchase to supply the higher slaughter pace. Cutout prices are expected to rebound.	4)	Even though the hog slaughter pace remains stronger than a year ago, market-ready hogs remain plentiful. The packers do not need to be aggressive.