Tuesday Morning Livestock Market Update - Fort Morgan Beef Facility to Resume Operations

GENERAL COMMENTS:

Cattle began trading higher with traders aggressive, most likely from short covering. Once that ran its course, futures continued to slide, resulting in a mixed close. The bullish news after the close should result in stronger prices Tuesday. Workers at the Fort Morgan, Colorado, beef plant voted to ratify a five-year agreement. Employees will return around Aug. 24, with harvest to resume the week of Sept. 7. The Fort Morgan plant can harvest up to 4,700 head per day. Boxed beef prices exploded on Monday with choice up $4.27 and select up $13.02. I cannot remember the last time a boxed beef category showed that much strength in one day. The combination of these items should provide support to the market Tuesday. Feeder cattle prices in the country remained soft in response to the recent pressure on cattle futures.

Hog futures barely maintained positive prices. There was little fundamental news to generate buying interest. The market continues to struggle due to the lack of positive fundamentals. The National Daily Direct Afternoon Hog report showed cash down $0.68 on rather light movement. Pork cutouts fell $1.15, adding to the negativity. The slaughter pace remains strong, indicating demand is good. However, market-ready hogs are plentiful. The packers are expected to be more aggressive in the cash market Tuesday.

	BULL SIDE		BEAR SIDE
1)	The reopening of the Fort Morgan Beef facility should provide support to the market. It will offset some of the losses from last week's plant closings.	1)	Traders may exercise caution despite the positive news developments. The cattle market will need to prove itself.
2)	The huge increase in boxed beef choice to $13.02 and the strong select price may indicate the summer slump is over.	2)	The strength of boxed beef will need to continue, or cattle futures will have limited upside potential.
3)	Hog futures held on Monday, which may indicate traders do not want to press the market lower.	3)	Hog futures could not hold the gains during the day on Monday, keeping the market bearish.
4)	Hog slaughter remains strong and should increase packer buying interest Tuesday.	4)	Continued weakness in cash hogs and pork cutouts will not support higher prices.