Tuesday Morning Livestock Market Update - Futures Should Hold Support

GENERAL COMMENTS:

The cattle market exploded early Monday on the news of the restriction of cattle imports from Mexico. A discovery of an animal with the New World screwworm prompted the announcement and the restriction. After the initial reaction to the news subsided, futures contracts lost their luster with live cattle closing with losses. Traders settled back, developing more of a wait-and-see attitude. Feeder cattle closed with triple-digit gains as they continued to outpace live cattle. Futures moved above technical resistance early but closed below that level in the end. The October Cold Storage report showed inventories of beef about as expected. Boxed beef prices were higher with choice up $2.30 and select up $1.67. Cash cattle may begin trading Tuesday as packers may want to take care of most of their purchases before the Thanksgiving holiday.

Hog futures extended gains Monday despite the uncertainty of cash and struggling cutouts last week. The uncertainty of cash continued and no price changes were released Monday due to packer confidentiality. Too few hogs traded to provide a good representation of prices. However, April through October futures contracts made new contract highs with June joining July to close over $100. Pork cutouts closed higher, posting a gain of $1.56 after initially being more than $4.00 higher at the midday report. Bellies dragged the overall price lower with a loss of $6.43. The Cold Storage report showed frozen pork supplies declined 7% from September and down 3% from last year. Stocks of pork bellies were down 8% from the previous month and down 42% from October 2023.

	BULL SIDE		BEAR SIDE
1)	The restriction of cattle imports from Mexico should support the market as it may tighten beef supplies further.	1)	Cattle futures pushed through technical resistance early Monday but fell back as the day progressed. This level of resistance may be viewed as a selling opportunity.
2)	Feeder cattle remain strong, leading the beef complex higher. Any bearishness seen from the Cattle on Feed report has been digested with traders looking ahead to the bullish implications of the restriction on imports.	2)	Cash cattle were higher last week, but packers may not be as willing to pay more for cattle this week. They may reduce slaughter to improve margins.
3)	Traders support the hog market in anticipation of continued good demand and a tighter supply.	3)	Hog futures were unable to hold early strength as the uncertainty of cash loomed over the market.
4)	The packers may step up more aggressively Tuesday to purchase hogs before the Thanksgiving holiday. The slaughter pace remains strong.	4)	The packers may not be very aggressive this week as they may have already purchased most of the hogs they need to maintain a strong slaughter pace.