Tuesday Morning Livestock Market Update - Futures Limit Higher on Monday

GENERAL COMMENTS:

After last week's sharp decline, Monday's trade was expected to be higher, but most did not expect the volatility that spiked futures sharply higher by midmorning. Trumps comments about looking into the packing industry certainly made the disgruntled cattle producer happy, but there is no clear indication that it will help support cattle prices or increase demand.

Hog futures found an ally in cattle, saving it from the rapid decline as futures have been falling since the end of September. They happily followed along with their four-legged friends with no real news other than being the cheaper consumer option in a market of expensive protein.

	BULL SIDE		BEAR SIDE
1)	The limit move on Monday stopped futures buyers from getting as long as they wanted or shorts to exit positions. Because of that reason alone, support should be expected in both feeder and live cattle futures to continue the move from Monday.	1)	The news cycle has not been friendly to cattle futures. Monday was a day of strength on little new news. It may be overdone.
2)	Political headlines have brought volatility. One item that hasn't gotten much attention is that beef was discussed in the U.S./China trade deal last week, but no real numbers have been released yet. No matter the volume, opening extra demand from exports is supportive to already tight supply.	2)	Ag Secretary Brooke Rollins has been paying close attention to Mexico's New World screwworm problem and increasing pressure from Mexico to open the border leaves futures on a teeter-totter, waiting for an influx of cattle to come. Rollins herself said it is a day-by-day discussion.
3)	Hog futures are still holding support from lows seen this summer.	3)	Hog futures hang by a thread as their rally Monday was led by cattle. Without a fundamental change in supply or demand, they are reliant on cattle to continue their support.
4)	Pork cutout prices have been trending higher, indicating higher pork demand.	4)	The trend has been lower for hog futures in the last month and one day of trading higher is not enough to break the bearish trend. Bears will see Monday's trade as an opportunity to add to short positions.