Monday Morning Livestock Market Update - Mixed Trading Activity Expected

GENERAL COMMENTS:

There was no change for cash cattle on Friday, eliminating any hopes packers would need to step up at the last minute to purchase more aggressively to maintain slaughter pace. December live cattle closed about steady for the week, while later contracts lost ground. February and April futures are in a downtrend. The market will have a lot of questions to ponder moving through the week. Export demand, domestic demand, slaughter pace and the Cattle on Feed report will keep traders guessing. Boxed beef took a hit Friday with choice down $4.33 and select down $1.56.

It was surprising to see cash close the week higher. It has been quite some time since that took place. The National Direct Afternoon report showed an increase of $0.11. That did not result in any strength in the market as traders need to see more of that and more consistently to get excited. Cutouts were up $1.46 once the final prices were released for the day. Because of trader uncertainty, spread trading dominated the activity with December, February, and April contracts lower while later contracts were higher. Cash is expected to be lower Monday as packers assess product movement; but with the strength of cash on Friday, packers may want to be more aggressive to begin the week.

	BULL SIDE		BEAR SIDE
1)	After a week of packers holding the line on cash, they may need to step up to purchase sufficient supply to keep a steady slaughter pace.	1)	Overall demand may decline as food prices are significantly higher and restaurant traffic has slowed.
2)	Lower corn overnight should support feeder cattle and in turn spill over into live cattle.	2)	Packers may begin to slow chain speed in order to increase margins. This would allow them to be less aggressive in the cash market.
3)	Higher cash and higher pork cutouts Friday may trigger some buying interest Monday as the final prices were not out until after the close.	3)	Packers may not be willing to bid higher for hogs Monday until they assess product movement over the weekend.
4)	Strong slaughter pace continues indicating end of the year demand is strong, which will keep supplies current and weights lower.	4)	Increased slaughter is being met with a sufficient supply of hogs. Packers have not had to be aggressive.