Wednesday Morning Livestock Market Update - Lawmakers Move to Block 90-day Beef Import Plan

GENERAL COMMENTS:

Cattle futures posted a strong day as the market opened stronger and never looked back. The free fall in cash may have subsided, giving traders the confidence to buy into an oversold market. The MACD technical indicator also crossed over, turning higher. Traders following technical indicators may feel more confident that a price retracement could unfold. If cash prices find stability this week, futures will rebound to reduce some of the discount they contain. Boxed beef prices did not provide strong support to the market, with choice up $1.40 and select down $0.48. Lawmakers are moving to block the importation of the large volume of beef over a 90-day period that is intended to reduce beef prices to consumers. If this is successful, futures will see further gains.

Hog futures regained the losses on Friday and then some, closing at the highest level since Aug. 10. The strength did not come from an increase in pork cutout prices, as cutouts declined $1.04. Packers did not release a price change for the National Daily Direct Afternoon Hog report even though cash trading activity was solid. The weighted average price was $86.35. Hog futures are not oversold, rendering the strength on Tuesday likely the anticipation of increasing positive fundamentals over time. However, futures likely will remain choppy as an uptrend develops.

	BULL SIDE		BEAR SIDE
1)	Cattle futures are oversold, and the MACD has crossed over, which may provide confidence for technical traders to buy into the market.	1)	Boxed beef prices have been choppy recently, which may limit what packers are willing to pay for cattle.
2)	If the importation of 300,000 metric tons (mt) of beef is successfully blocked, cattle futures will see further strength.	2)	Cash cattle this week are expected to be no better than steady as packers continue to slaughter fewer animals.
3)	Hog futures regaining what they lost on Friday may indicate the market may have found support.	3)	Hog futures are expected to remain choppy as traders have not had the confidence to establish long-term positions, but rather continue to day trade the market.
4)	Packers should remain aggressive Wednesday as they did not purchase a large volume of hogs on Tuesday.	4)	Pork cutout prices remain choppy, lacking consistent support. This will continue to limit the upside price potential.