Tuesday Morning Livestock Market Update - Livestock Futures May Find Little Direction

GENERAL COMMENTS:

Cattle futures drifted lower through the day as traders did not have much fundamental news to provide direction. It may be difficult for cattle futures to regain the losses of the past two weeks. Traders may be looking over their shoulders at what took place a year ago when futures fell substantially during November and will remain cautious. There will be no cash cattle trade Tuesday as packers and feedlots have little reason to do business this early in the week. There is concern the cash prices will not perform much better than last week. The packers continue to hold the line on slaughter, attempting to improve margins. Boxed beef prices showed some strength Monday with choice up $0.57 and select up $2.13. Feeder cattle are attempting to build support. Prices at auctions are variable and may remain that way through the end of the year.

Hog futures closed mixed with December through July contracts lower and later contracts higher. Traders anticipated cash might be weaker to begin the week. The National Daily Direct Afternoon Hog report showed cash down $1.56. The packers are expected to resume their aggressiveness this week but need evidence of continued strong demand. Pork cutout values were able to carve out a minor gain of $0.04. There is growing concern the hogs are not out there that were anticipated a few months ago. That may continue to support the market even though futures are overbought.

	BULL SIDE		BEAR SIDE
1)	There is a strong demand for feeder cattle at auctions as the supplies remain tight. The cattle herd is showing little signs of rebuilding.	1)	Cattle futures are having a difficult time finding solid support. Boxed beef has been less than stellar and the strength of cash prices may have run its course.
2)	Lower cattle futures may bring traders back into the market more aggressively as futures have corrected from their overbought position.	2)	Traders are cautious as they look at the weakness that took place in November 2023. There is concern a similar pattern may develop.
3)	The supply of hogs may be less than anticipated a few months ago. This may keep the packers aggressive and cash prices higher as the slaughter pace remains strong.	3)	December and February hog futures have a chart gap that may be filled before the market can resume the uptrend and reach new highs.
4)	The trend is up and traders continue to support the market. Futures weakness has been short-lived as it is viewed as a buying opportunity.	4)	The supply of hogs may be less than anticipated but packers still have sufficient supplies available to maintain a strong slaughter pace.