Wednesday Morning Livestock Market Update - Lower Cattle Prices Expected

GENERAL COMMENTS:

Traders were uncertain about the potential of live cattle futures. There is an expectation cash will trade lower this week as sales that were not done last week will be offered this week as cattle will be moved before prices fall further. The feedlots have lost control of the market for the time being and now the market is feeding on itself. Lower futures are influencing cash cattle trade. Packers are reducing their slaughter in an attempt to pay less for cattle and to support the weakening boxed beef. Boxed beef prices were mixed but continued to struggle overall. Choice cuts were up $0.07 with select down $2.52. Traders will also be cautious about the Cattle on Feed report to be released Friday.

Hog futures posted strong gains during the day but could not hold, closing moderately higher. June and July made new highs but fell back as pork cutouts appeared weaker. It seems the $3.00 decline of cutouts was overdone with some of that likely to be regained Wednesday. The National Daily Direct Afternoon Hog report showed cash up $2.28 as packers were aggressive and bought quite a few hogs. Slaughter remains strong so the fluctuation of cutouts is understandable. There is quite a bit of product to work though but increased demand is accomplishing the task as cutouts have been trending higher.

	BULL SIDE		BEAR SIDE
1)	Traders bought feeder cattle futures aggressively, anticipating the market might be overdone to the downside. Not much has changed fundamentally.	1)	The April live cattle contract closed at the lowest level since December 31, 2024. The trend remains down with further weakness likely.
2)	Cash has declined the past two weeks as feedlots needed to move cattle. Once those are gone the supply is expected to tighten.	2)	Boxed beef prices have been struggling as demand has been reduced. Consumers continue to face high grocery prices.
3)	Hog futures made new highs in the June and July contracts, keeping the uptrend intact. Futures should retest those levels again.	3)	Hog futures could not hold the highs falling back substantially as traders took quick profits.
4)	The packers have been aggressively purchasing hogs so far this week. They may remain that way for one more day to procure the needed supplies.	4)	The large decline in pork cutouts may limit the upside potential of futures for the time being.