Monday Morning Livestock Market Update - Cattle Pressure Likely Monday

#completecalfcare

GENERAL COMMENTS:

Sluggish market direction is expected through the early hours of trade Monday as traders return to the market following the weekend break. The lack of underlying support in last week's Cattle on Feed report is likely to limit buyer support and put additional pressure on cattle trade. The generally steady cash cattle trade last week that developed late in the week seemed to focus on additional market uncertainty through the complex, wondering if prices will be able to break out of the recent back and forth shifts last week following the move higher in early September. Cash cattle markets will focus on showlist distribution and inventory taking with active bids and offers not expected until midweek or later.

Cash hog bids are expected to develop steady to $1 per cwt higher with most bids expected steady to firm through the morning Monday. This overall support continues to bring additional stability even though moderate, late-week pressure developed through nearby lean hog trade late last week. Mixed futures trade is expected as traders try to establish a more defined direction over the coming days as traders look for a combination of outside market support as well as underlying uncertainty when it comes to global trade issues.

	BULL SIDE		BEAR SIDE
1)	February live cattle futures moved above $122 per cwt once again in late-week trade, as futures settled at $122.25 per cwt, even though the focus on growing supplies continues, additional long-term demand focus remains in the entire cattle complex.	1)	Feeder cattle placements through the month of August increased significantly with 107% of feeder cattle in feedyards compared to one year ago. This is well above expectations and at the top end of estimate ranges before the report.
2)	Moderate price pressure in grain trade continues to bring additional buyer activity to the livestock market, especially the cattle trade. This focuses on lower overall production costs not only for cattle currently in feed yards, but the focus on potential reduced feed costs through the rest of the year.	2)	Total cattle on feed increased to above expected levels and slightly above the top range of estimates. With 106% of cattle on feed as of September 1st, this will likely add some early week pressure to the entire complex. This is firmly above the expected level of 105.3%.
3)	Continued strong support in the Dow Jones Index last week has set new market highs in the stock market. This is helping to spark some underlying support through the entire economy at this point despite limited short-term support in many commodity markets.	3)	Pork values was only able to show minimal support through the end of last week, creating some concerns that the recent underlying support in cash trade and futures support could be limited by the ability to keep actively moving pork product during late September.
4)	Cash hog values continued to march higher through the last couple of weeks as overall firm buying continues to keep the pipeline full. The $1 per cwt gain Friday afternoon is expected to add additional cash buyer support through the complex Monday.	4)	Firm futures pressure Friday in all nearby lean hog contracts is bringing questions about the ability to spark additional underlying support through the entire lean hog market over the coming days. This may spark increased volatility in nearby futures trade early Monday.