Monday Morning Livestock Market Update - Caution May Dominate Early Trading

GENERAL COMMENTS:

Cash cattle closed out the week mixed as it traded earlier in the week. Cattle in the South traded $1.00 lower while cattle in the North were $1.00 to $2.00 higher. There was some give and take by both packers and feedlots. Packers are trying to preserve margins due to boxed beef prices struggling recently. On Friday, boxed beef was lower with choice down $2.90 and select down $0.14. It will be interesting to see how many cattle were again purchased for deferred delivery. Feeder cattle were under pressure due to strong corn prices. March feeder cattle were higher due to it moving toward the last day of trading on Thursday and the anticipation of where the contract would settle. The CFTC has now finally caught up on the Commitment of Traders report with the most recent being released. Funds sold 28,789 live cattle contracts last week, reducing their net-long futures positions to 62,677. Funds were net sellers of 3,361 feeder cattle futures, reducing their net-long positions to 6,536 contracts.

Hogs put in a strong day Friday, which might have been a combination of short-covering into the weekend and higher cutout values. Recently, traders seemed to reduce some of their exposure prior to the weekend. Then take a fresh look at the fundamentals when the week begins. The National Direct Afternoon Hog report showed cash down $0.13. Cutouts were higher, posting a gain of $0.75. Packers are not expected to be aggressive Monday as they will assess product movement over the weekend. Traders will be looking ahead to the upcoming Hogs & Pigs report to be released Thursday. The Commitment of Traders report is up to date and reported funds as sellers of 19,292 futures contracts for the week ended 3/21/2023 bringing their net-short futures positions to a record 21,625 contracts.

	BULL SIDE		BEAR SIDE
1)	Selling may have subsided for the time being in live cattle as mixed cash last week may indicate support may be returning.	1)	Boxed beef continues to show some weakness that may indicate demand is slowing. This may impact the aggressiveness of packers.
2)	April live cattle and March feeder cattle have a chart gap remaining above the market that may be filled. March feeders have the next four days to accomplish the task.	2)	Funds have reduced their net-long positions, possibly reducing their exposure in an uncertain market.
3)	Hogs are oversold and were ready for a price correction. Further short-covering could continue as traders position themselves for the Hogs & Pigs report Thursday.	3)	Funds moving to a record-short futures position may keep the hog market from trending higher anytime soon.
4)	Pork cutouts were higher three days last week, possibly indicating an increase in demand.	4)	Pork demand needs to be more consistent with cutouts trending higher before traders may turn more bullish.