Tuesday Morning Livestock Market Update - Strong Demand Supports Complex

GENERAL COMMENTS:

Live cattle futures spent some time in negative territory but were able to close Monday positive for the day. Traders may be hesitant over the upside price potential for cash. The fact that packers did not purchase many head for deferred delivery provides confidence that higher prices may be obtained. Boxed beef prices surged with choice up $3.35 and select up $1.72. There have been back-to-back days of good boxed beef prices which has added to the support for higher cash prices. Futures contracts for next year continue to make higher highs and are nearly at a level of technical resistance. The current pasture and rangeland conditions are not very good, which may continue to curtail heifer retention and the growth of cattle numbers.

Hog futures were higher in most contracts Monday as traders saw strength in cash and cutouts. The National Direct Afternoon Hog report showed cash up $1.79. The packers have been starting each week aggressively, indicating demand is good and they want to purchase early to obtain needed supply for the week. Cash is expected to be higher Tuesday as the packers remain aggressive. Cutout values increased by $1.74. The good demand requires a strong slaughter pace, keeping hogs from backing up in the country. Weights are higher but supplies are current.

	BULL SIDE		BEAR SIDE
1)	The recent strength of boxed beef prices may indicate demand is improving. The improving demand will require slaughter to remain near the current level.	1)	Packers may try to reduce slaughter pace to limit the need to be aggressive with cattle purchases and limit what they need to pay for cattle.
2)	There is a strong demand for feeder cattle as supplies are tight and the price outlook for live cattle continues to look good.	2)	Cattle futures are overbought and a price retracement could take place if there is an indication of steady or weaker cash.
3)	The December hog contract closed above technical resistance with the later contracts near resistance. Futures are near contract highs in 2025 contracts.	3)	Hog futures are at technical resistance levels. Any indication of reduced pork demand could trigger substantial liquidation.
4)	Pork demand is strong and the packers have been aggressive as they maintain increased slaughter speeds.	4)	Packers have sufficient hogs available and do not need to be aggressive with purchases even though slaughter speeds are higher. Once they have purchased hogs for the week, cash prices decline.