Tuesday Morning Livestock Market Update - Futures May Struggle to Find Support

GENERAL COMMENTS:

Once one case of the New World screwworm (NWS) was confirmed, more cases have been discovered. Cases are expected to increase now that it has moved into the U.S. It is uncertain what the fundamental impact will be on the market. It does not impact the safety of beef, and it may not impact cattle supplies. If anything, some cattle movement will be limited, and potentially, some impact on herd rebuilding. The result is that ranchers will be more vigilant, increasing the time spent observing their cattle. However, the uncertainty may trigger further liquidation in the futures market as traders may reduce their long positions. Boxed beef prices were lower on Monday, with choice down $0.50 and select down $4.60. Early expectations are for cash to be no better than steady this week.

Hog futures tried to regain some lost ground but fell through and closed below the previous low. Fund traders are net short in the market and seem to feel comfortable increasing their short positions. The July contract has moved to the lowest level since Dec. 2, 2025. Support in the market remains elusive. Packers were aggressive on Monday with cash on the National Daily Direct Afternoon Hog report up $2.26. That is not expected to have much impact on the market today due to the weakness in pork cutouts. Cutouts were down $2.72. Packers are expected to be aggressive again today as they purchase hogs early in the week rather than later.

	BULL SIDE		BEAR SIDE
1)	The New World screwworm should have little impact on the overall market fundamentals. They should remain bullish.	1)	More cases of the New World screwworm may increase market uncertainty and trigger further liquidation.
2)	Pasture and rangeland conditions increased by 1 percentage point last week to 31 percent good to excellent. There are reports of continued herd reductions.	2)	There could be some negative consumer impact on the market due to misinformation about the New World screwworm, which could lead to reduced beef consumption.
3)	Hog futures seem to be overdone to the downside. The market will run out of aggressive sellers, and a price retracement will unfold.	3)	Hog futures remain in a downtrend. Traders are following the path of least resistance.
4)	There continue to be signs of increasing pork demand. Low prices should cure low prices.	4)	Hog supplies remain sufficient, with packers having little difficulty purchasing the hogs needed for slaughter.