Tuesday Morning Livestock Market Update - Traders Contemplate Cash Cattle Potential

GENERAL COMMENTS:

JBS in Greeley, Colorado, and the workers' union agreed on a contract, moving production back to normal. The plant was up and running after a three-week strike, but no contract agreement had been reached until over the weekend. This did not have an impact on the market in itself. The report on Friday, April 10, by the Mexican federal government that the New World screwworm was reported on a canine within 88 miles of the Texas border did not have an impact on the market either. The case was actually reported earlier, but Mexico formally announced it on Friday. Traders are focused on slaughter volume and the cash potential this week. Boxed beef prices were higher, with choice up $1.02 and select up $2.30. This moves the invented choice/select spread to $1.72.

Hog futures have not been able to regain footing with contracts through October, ending lower. The June contract moved below support on Monday but managed to close above it. Falling below support did not trigger liquidation, which may increase buyer interest today. However, with no fundamental change, the market may find a level of support but move sideways in the near term. The April contract is moving in a tight, sideways pattern with the final trading day for the contract on Wednesday. The National Daily Direct Afternoon Hog report showed cash down $0.32. Packers are expected to step up more aggressively today. Pork cutout values increased by $0.44.

	BULL SIDE		BEAR SIDE
1)	The next target for feeder cattle futures is contract highs. This may be reached sooner rather than later.	1)	Cattle futures are overbought, and any indication of the weakness of cash could trigger liquidation.
2)	Higher cash cattle trade last week on light activity points to the potential for higher prices again this week.	2)	Feeder cattle futures are nearing contract highs, which may be a strong level of resistance.
3)	The June hog contract closed above support after moving below it during the day. This could trigger short-term technical buying interest.	3)	Cash hogs continue to struggle as packers have not had to be aggressive to purchase what they need to maintain the higher slaughter pace.
4)	Hog slaughter is not slowing down as packers need to satisfy demand. Eventually, hog supplies may tighten and prices will trend higher.	4)	Traders have not found any solid reason to be bullish on the hog market. Until they do, the price may flounder near the current levels.