GENERAL COMMENTS:
Tuesday was a volatile day of trade for cattle and hogs. Live cattle started off strong, losing all momentum by the end of the day. Feeders appeared like they were going to keep their rally going but felt the pressure from the live contracts as well as hogs losing ground, ending up softer by the close. Pork cutout values took a big hit, losing $2.84 while the CME Lean Hog Index fell $1.49.
If there is one thing that the livestock markets have been good at lately, it is keeping us on our toes. Today's trade is expected to be volatile, with hogs trending back lower.
| BULL SIDE | BEAR SIDE | ||
| 1) | The cattle herd size is still extremely low -- the lowest we've seen in 75 years. |
1) | Packers have been somewhat absent as of late. It could be a sign that demand has slowed. |
| 2) | Consumer demand does not appear to be lacking even with the high prices. President Trump discussed his desire to send a stimulus package to Americans paid for by the money collected from tariffs. While this is a long way from becoming reality, the possibility could bring greater consumer spending including beef purchases. |
2) | Any news on Mexico border reopening would be one of the biggest risk factors in cattle markets today. |
| 3) | Hog futures did trade higher early Tuesday morning, making the Friday low appear like a bottom from a technical perspective, slightly higher than the July lows. |
3) | Monday's strength in hog futures was purely due to the speed at which cattle futures climbed. Tuesday proved that the market would have difficulty shifting from the bearish trend without a shift in fundamentals. |
4) |
Holiday consumption brings more demand for higher quality protein sources. With beef prices high, pork is a delicious and affordable choice. |
4) | Pork cutoff prices falling rapidly Tuesday is a bearish indicator. |
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