Monday Morning Livestock Market Update - Mixed Trading Activity Expected

GENERAL COMMENTS:

After holding out until Friday afternoon, cash cattle traded with live cattle in the South $1.00 to $2.00 higher with Northern dressed cattle averaging $4.00 higher. Higher cash is a weekly occurrence, and this may be the norm for a while. With reduced cattle numbers and good demand, it will take higher cash to pull cattle forward. Feedlots clearly have the leverage and can sell cattle at will and not have to deal with a backlog. Boxed beef was mixed Friday with choice up $0.82 and select down $0.72. This is not expected to have a bearing on today's trade. However, traders are expected to follow a similar pattern as the past weeks with mixed activity as weekend demand is assessed.

It was good to see hog futures close higher across the board Friday, but gains were limited. It seemed to be more the result of some short-covering into the weekend rather than any fundamental change. The National Direct Afternoon report showed cash down $0.66. Cutouts showed a slight loss of $0.16. The past few weeks had higher cash developing on Monday and this pattern could continue today as it seems packers are becoming a bit more aggressive earlier in the week rather than waiting until midweek.

	BULL SIDE		BEAR SIDE
1)	Increasing cash on a weekly basis has become the norm. It is expected higher again this week.	1)	Higher cash cattle have not been able to move futures to new highs. Traders may remain cautious again this week prior to cash trade.
2)	Feeder cattle established new contract high closes, both live and feeder cattle futures are poised to make new highs and resume the uptrend.	2)	Poor weekly export sales may indicate beef prices are too high for international buyers. Domestic demand may also be impacted.
3)	Hog futures closed higher despite lower cash and cutouts. Traders may not want to press the market too much lower.	3)	The higher close for hogs was not supported by underlying fundamentals. This may limit upside potential.
4)	Hog futures are somewhat oversold which may limit further liquidation and could generate further short-covering.	4)	Packers continue to have access to hogs without having to be aggressive with cash.