Cattle futures defied the bearishness of the Cattle on Feed report, pushing higher early in the day, but hit resistance, triggering further selling. The recent decline had already factored in most of the negativity, but traders saw little reason for the market to rebound. However, beef movement seems to have been strong over the holiday, with boxed beef prices substantially higher. Choice boxed beef was up $2.63, with select up $5.30. This may provide support today, as cash is expected to be steady this week. Feeder cattle futures mirrored live cattle with early strength running out of steam.
Hog futures tried to hold, but further liquidation was triggered, pushing futures into triple-digit losses in the August and later contracts. Weekend demand was good, resulting in pork cutout values increasing $2.59 to $98.85. The National Daily Direct Afternoon Hog report showed no change as packers did not release any prices. Packers are expected to be aggressive as they need to purchase hogs to maintain slaughter and make up for plants being closed on Monday.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle futures did not fall apart due to the bearishness of the Cattle on Feed report. It had already been factored in. |
1) | Cattle futures were unable to hold the gains on Monday as traders are cautious over the continued strength of cash. |
| 2) | Significantly higher boxed beef prices indicate that weekend demand was strong and consumers continue to pay high prices for beef. |
2) | Beef demand may slow now that Memorial Day is past, and summer weather and high prices may impact demand. |
| 3) | Hog futures are oversold, and short covering could be triggered as the market may be overdone to the downside. |
3) | Hog futures made new lows again on Monday as liquidation continues to grip the market. |
4) |
Packers are expected to step up more aggressively, as last week's purchases were lighter. They will want to make up for no slaughter activity on Monday. |
4) | Traders continue to trade the trend, and the path of least resistance in hog futures is down. |
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