Tuesday Morning Livestock Market Update - Follow-Through Buying Is Expected

GENERAL COMMENTS:

Cattle futures pushed higher as traders became aggressive on the heels of a stronger cash cattle trade last week. Feedlots are in the driver's seat and will continue to hold for higher cash. Packers have not been able to surround themselves with many cattle. The Cattle Inventory report showed the lowest amount of cattle in feedlots since 2018. The Cattle on Feed report a few weeks ago showed the continued tightening of feeder cattle inventories. This does not indicate cattle supplies will be increasing anytime soon. Packers continue to face the fact that reduced slaughter is not going to boost supplies. It is uncertain what is going to break this cycle and increase the incentive for herd rebuilding. Boxed beef prices were higher on Monday, with choice up $2.65 and select up $2.97.

Hog futures exhibited strong buying interest with contracts closing the chart gaps that remained from last week and setting new highs in the May and later contracts. The July contract easily moved above $110 and is knocking on the door of $111, falling just shy of reaching that level on Monday. There is some evidence of hog numbers tightening amidst the outlook for increasing demand. Pork cutout values increased $1.48 on Monday. However, packers remained less aggressive with the National Daily Direct Afternoon Hog report down $1.35. It is expected that packers may follow their usual pattern and step up to purchase hogs more aggressively today.

	BULL SIDE		BEAR SIDE
1)	Strong cash cattle prices last week and the prospect for higher cash this week should continue to support futures.	1)	Cattle futures are supported but are having some difficulty maintaining a consistent uptrend. Traders are cautious over outside influences.
2)	Feeder cattle being purchased by feedlots continue to command a premium over the market in many cases. Supplies are tight, and feedlots want to keep lots full.	2)	Even though sterile New World screwworm flies have been released along the border, the threat of a case in the U.S. will remain prevalent.
3)	Hog futures moved to new contract highs in the May and later contracts, keeping traders buying and holding contracts.	3)	Packers are having no difficulty obtaining the hogs they need to maintain the strong slaughter pace.
4)	Pork cutouts continue to remain strong, indicating good consumer demand.	4)	Without the consistent support of cash, hog futures may have a difficult time seeing much further upside potential.