Monday Morning Livestock Market Update - Traders to Begin Week With Caution

GENERAL COMMENTS:

There was no change in cash Friday with the business for the week showing Southern cattle trading $2.00 lower and Northern dressed cattle $1.00 lower. Traders seemed to believe the bleeding may be near the end and the discount of futures to cash seems to be sufficient for now. Boxed beef was mixed Friday with choice down $1.11 and select up $0.10. Boxed beef prices will be the area to watch this week to see if they can hold or if there will be a slow erosion of prices. The WASDE report showed USDA's estimate for beef production up 146 million pounds with the average price up $2.30 per cwt at $166.50. The first estimates for 2024 were released with an average steer price of $172.00. The Commitment of Traders report showed funds reducing their long live-cattle futures positions by 12,134 contracts, reducing their net-long positions to 94,010 contracts. Feeder cattle were trimmed 2,416 contracts to a net-long futures position of 11,757.

Hog futures spent time on both sides of unchanged Friday, eventually closing mixed. It seemed like the market digested the Supreme Court decision on Prop 12 and looked ahead to demand fundamentals. USDA's estimates on the WASDE report did not provide much support as they reduced their average price for the year $4.50 per cwt, down from the April estimate. Production was raised 21 million pounds with exports raised 123 million pounds. Cutouts closed slightly higher with a gain of $0.19. The National Direct Afternoon Hog report showed cash down $2.95. The Commitment of Traders report showed funds increasing their short positions by 10,116 contracts to a net-short position of 21,951 contracts.

	BULL SIDE		BEAR SIDE
1)	Traders seem to think the decline of cash may have run its course and the discount to cash may be too great.	1)	Boxed has been showing some weakness recently, which may indicate some slowing in demand.
2)	Even though The WASDE numbers for beef are only estimates, it did provide some positive information if the estimates come to fruition.	2)	Packers may not be aggressive in the cash market again this week as they want to maintain margins. Feedlots have been willing sellers.
3)	Hogs have been able to hold after the Prop 12 decision, possibly indicating the market has this already factored in.	3)	Hogs have not been able to find consistent support for both cash and cutouts.
4)	If packers follow the pattern of the previous weeks and bid higher early in the week, further support may be seen in the market.	4)	USDA reduced the price outlook for pork on the WASDE report, keeping a bearish tone in the market.