GENERAL COMMENTS:
Cattle futures began lower Monday, as expected, due to the Cattle on Feed report but eventually found greater buying interest as traders focused back on the current fundamentals. Higher cash last week and the potential for no less than steady cash this week provide continued support. However, support has not been sufficient to push futures above technical resistance. Boxed beef was mixed Monday with choice up $1.26 and select down $2.90. This may cause traders to pause on their outlook for continued higher prices. Both domestic and international demand may begin to waver at the higher prices. The packers were able to purchase cattle ahead last week, but they are keeping up with demand and with forward purchases nearly the same as the previous week. this is not considered negative to the market. Thursday is the last trading day for October live cattle futures.
Hogs had a positive Monday with new contract highs through the October 2025 contract. Cash hogs showed a substantial gain with the National Direct Afternoon Hog report showing an increase of $5.29. The packers were aggressive and needed hogs due to strong demand last week and over the weekend. Pork cutout values jumped $3.01 with all categories posting higher prices. The strongest gains were seen in loins and bellies with an increase of $4.78 and $4.68, respectively. The strong slaughter pace is keeping hogs current with hog numbers seemingly not as plentiful as earlier reported.
| BULL SIDE | BEAR SIDE | ||
| 1) | The Cattle on Feed report was slightly negative relative to expectations but friendly compared to a year ago. Traders have already factored in the report. |
1) | Live cattle futures may have difficulty breaking through and holding above technical resistance. |
| 2) | No worse than steady cash is expected for cattle this week, providing continued support to the market. |
2) | Boxed beef prices may be wavering again, limiting the upside price potential of futures. |
| 3) | The packers began the week very aggressively in the cash market as the stronger slaughter pace needed to be supplied. Hog numbers may be tightening. |
3) | The large gain in cash hogs Monday may not hold through the week once the packers have their needs covered. |
| 4) | Higher cutouts indicate continued strong demand. High beef prices are causing more consumers to see the value of pork. |
4) | Managed money traders are holding near record-long positions and any bearish news could trigger Katie-bar-the-door selling for a few days. |
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