Monday Morning Livestock Market Update - Moderate Price Shifts Expected

GENERAL COMMENTS:

Early trade Monday is expected to start steady to weak with the overall pressure from last week likely to carry into the market. The Cattle on Feed report on Friday afternoon came in neutral to bearish following spot-on marketing levels, while both placements and total Cattle on Feed numbers were increased from early estimates. The main focus was on the bounce higher in placements, focusing on additional longer-term supply available to the market through the rest of the year. Cash cattle activity is likely to remain undeveloped with showlist distribution and inventory-taking the main order of business.

Strong support late last week is creating some uncertainty as traders have not started to adjust markets for end-of-month activity. This could add even more volatility to the market, although traders are now going to be closely following the ability to push market fundamentals higher in order to sustain the recent futures support. There will be even more emphasis on the direction in both cash hog and pork cutout values over the next couple of days. Early cash hog bids are expected to be steady to $1 lower Monday morning with most bids likely to be steady to weak. Daily procurement levels are targeted at 463,000 head Monday.

	BULL SIDE		BEAR SIDE
1)	Cattle marketed during the month of January is seen at 106%. This is spot on with early market expectations and continues to focus on the ability to aggressively move beef through early 2018.	1)	Aggressive moves higher in cattle placements in feedyards during the month of January is likely to limit long-term support in the feeder cattle futures.
2)	Despite the volatility in the cattle futures through last week, boxed beef values continue to show aggressive and firm market support. This is likely to help draw additional underlying support through the entire complex.	2)	Live cattle futures pulled back further once again Friday. Although most of the late-week activity was based on position taking, the overall lack of buyer support is expected to bring additional underlying concerns to the market as market volatility may be evident over the near future.
3)	Strong continued buyer support continues to develop through lean hog futures following the $4 market rally that started to develop last week. Additional upward market activity is likely through the end of the month.	3)	Continued pressure in cash hog values despite a strong market rally in the futures trade is likely to add limited support to the market as traders still are focusing on the inability to bring this support to underlying fundamental markets.
4)	Price stability and narrow gains have slowly developed in pork cutout values. This is likely to build even more momentum across the entire complex as traders look for increased underlying support in both futures and cash market trade during early March.	4)	The mixed trade on Friday is expected to bring a sense of market correction back into the market Monday morning. With traders focusing on the unchecked gains over the last few days, and end of the month adjustments still likely, additional market swings are likely Monday.