Tuesday Morning Livestock Market Update - Futures May Find Little Direction

GENERAL COMMENTS:

Cattle futures ran out of aggressive selling on Monday after contracts gapped lower on the open. The liquidation ran its course with short-covering and new buying interest taking place. There remains uncertainty in the market, but traders have digested some of it and are focusing more on the fundamentals. The news surrounding the potential JBS strike has been quiet. The lower cash cattle trade last week casts a little cloud over the market with early thoughts that cash may be no better than steady this week. Packers continue to reduce the slaughter pace in an attempt to back up cattle and bolster boxed beef prices. Boxed beef prices were higher on Monday, with choice up $1.50 and select up $3.90.

Hog futures were mixed. There is some caution being exercised in the nearby contracts. The current market fundamentals may not be sufficient to continue to push prices above the level of the current futures prices. However, later contracts continue to trend higher, with the October and later contracts again making new highs. Packers followed the pattern of last week with strong buying interest on Monday. The National Daily Direct Afternoon Hog report was up $1.49. Pork cutouts added to the support with a gain of $0.73. Hog slaughter is running opposite of cattle, with an increasing number of hogs being processed.

	BULL SIDE		BEAR SIDE
1)	The liquidation of cattle futures seems to have run its course, with buyers turning their attention to bullish market fundamentals.	1)	The uncertainty hanging over the market due to the implications of a strike at the JBS plant in Greeley may limit upside potential for now.
2)	Boxed beef prices have been trending higher, indicating demand is alive and well.	2)	There are expectations that the cash cattle trade will be no better than steady this week, with a potential for lower trade to develop.
3)	The October and later hog futures continue to make new contract highs on nearly a daily basis. Traders anticipate stronger prices as the year progresses.	3)	Nearby hog futures may move in a sideways trading range as the current fundamentals may not suggest higher prices.
4)	Packers purchased hogs aggressively on Monday. This is a strong beginning to the week with the potential for higher cash today.	4)	Hog supplies are plentiful and at higher weights than a year ago. Packers have not had to bid aggressively to obtain the hogs they need.