Tuesday Morning Livestock Market Update - Quarterly Hogs & Pigs Report Will Be Released

GENERAL COMMENTS:

The reaction of the cattle market to the bullish Cattle on Feed report was less than expected by many. Much of it has already been factored in with the overall numbers in the report, providing continued support under the market. However, the support was not sufficient to close the chart gaps above the market in most contracts. The June, August and December live cattle contracts managed to close the gaps. The other chart gaps may be closed before the end of this week. Boxed beef prices showed strength, with choice up $1.24 and select up $4.67. It is possible that boxed beef has found support and will trend higher. Packers are not expected to be aggressive this week due to Christmas and not needing many cattle due to reduced slaughter and having already purchased some ahead.

Hog futures found support despite lower cash and cutouts. Some of the strength stemmed from traders feeling confident of a stronger pork demand. Some of it could have stemmed from the positioning of traders ahead of the Quarterly Hogs & Pigs report to be released today. The report is likely to have little impact on the market, but there is always concern over the unexpected. Trading activity today will again largely be positioned ahead of the report and the holidays. All hogs and pigs are estimated to be 99.1% of a year ago. Hogs kept for breeding are estimated at 98.8%. The National Daily Direct Afternoon Hog report showed cash down $0.29. Pork cutouts were down $1.35. Packers are expected to be more aggressive today to surround themselves with more hogs ahead of the holidays.

	BULL SIDE		BEAR SIDE
1)	The Cattle on Feed report was bullish and should continue to provide support to the market.	1)	Packers are not expected to need many cattle this week or next week. That may result in lower cash prices and limited upside price potential.
2)	There are chart gaps above the market in many contracts. Trader support and holiday trading activity may result in closing these gaps.	2)	Lighter holiday trading activity may leave the castle market in a sideways pattern.
3)	A new contract high was made in August hog futures, with other contracts closing higher. The uptrend remains.	3)	The release of the Quarterly Hogs & Pigs report may keep traders cautious, and volatility limited.
4)	Hog slaughter continues to remain strong. Demand is strong with packers easily absorbing the higher-weight hogs.	4)	The weakness in pork cutouts on Monday may indicate that much of the consumer buying for the holidays is now complete.