Tuesday Morning Livestock Market Update - Uncertainty May Result in Further Liquidation

GENERAL COMMENTS:

Cattle futures were expected to trade higher in response to the Cattle on Feed report, but after spending some time in positive territory, the uncertainty of the impact of a potential strike at the JBS Greeley plant took center stage. This overrode any other bullishness present in the market. The strike has not yet taken place, but 99% of the workers voted for a strike and picket signs are being made. The plant in Greeley is a major packing plant and would disrupt a substantial supply of beef and tallow. It is uncertain whether that would cause cattle prices to decline, as other packing plants will continue to operate and need to increase chain speed to take up the slack. Boxed beef prices were higher on Monday, with choice up $2.53 and select up $3.57.

Hog futures posted steady gains on Monday with limited fanfare. Traders continue to support the market after the recent sell-off, anticipating increased demand from high beef prices. Futures have regained more than half of their losses with prices closing higher for five consecutive days. The National Dairy Direct Afternoon Hog report showed cash up $2.32, moving the weighted average price up to $91.28. It is very unusual for packers to be this aggressive at the beginning of the week. They may be more aggressive today and obtain the hogs they need earlier in the week. Pork cutout values increased by $1.79. This combination should provide further support to the market.

	BULL SIDE		BEAR SIDE
1)	Lower placements on the Cattle on Feed report should support the market as supplies will remain tight.	1)	The uncertainty of the impact of a potential strike at the JBS Greeley plant will keep traders uncertain and willing to liquidate long positions to preserve a profit.
2)	There has been no definite date set for a strike at the JBS Greeley plant. If it gets settled, the market will rebound quickly.	2)	The inability of cattle futures to close the chart gaps may signal that the market may be running out of steam, with further strength difficult to find.
3)	Packers being aggressive with hog purchases on a Monday is rare. Demand may be increasing significantly, and they need to get their hands on more hogs.	3)	Packers may purchase hogs early in the week and then step back, resulting in lower cash developing the rest of the week.
4)	Hog futures have regained more than half of the recent losses as traders are comfortable buying with the trend.	4)	Hog futures have regained more than half of the losses and may be in line with where they should be. This may limit further gains and may develop a sideways trading pattern.