Monday Morning Livestock Market Update - Uncertain Start to the Week

GENERAL COMMENTS:

Cash cattle traded steady with the week and with the previous week, providing traders some confidence to buy into the market. There is anticipation for potentially higher cash this week due to packers being willing to pay steady to higher cash over the past few weeks. There is some confidence boxed beef prices may be near, or at, support. If boxed beef stabilizes, packers may be willing to pay a bit more to obtain the cattle they need to meet demand. Live cattle futures showed limited gains last week, but the gains of Thursday and Friday may have been an indication of further strength this week. Boxed beef prices declined slightly with choice cuts down $0.08 and select cuts down $0.06. Cash trading is not expected to take place Monday.

Hogs made a nice bounce Friday, but it was likely due to it being the end of the week and it being an oversold market. The bounce did not come because of the chart gaps being closed, because they were not closed. The December contract came within 5 points of closing the gap with Feb. 12 points from closing the gap. This may keep traders uneasy as the week unfolds. Cash on the National Direct Afternoon report declined $0.96 while cutouts plummeted $4.74. This does not put the market in a strong position in the near term.

	BULL SIDE		BEAR SIDE
1)	Live cattle pushed above recent chart resistance on Friday, possibly opening the way for further follow-through buying.	1)	The outlook for cattle supplies is not friendly to the market with another Cattle on Feed report this Friday.
2)	Boxed beef might be finding support, keeping packers active and willing to pay more to obtain the cattle they need.	2)	Packers may not be willing to pay more than steady cash again this week. There remains concern over ongoing beef demand.
3)	Hog futures posted a nice rebound on Friday even though cash and cutouts did not support the move. Traders might be turning more bullish for the long term.	3)	The chart gaps below the market still have not been filled. They may need to be filled before futures have a sustained move higher.
4)	Futures have a chart gap, remaining nearly $3 above the market that needs to be filled.	4)	Hog supplies remain heavy, leaving sufficient numbers available for packers to purchase without having to bid up for them.