Monday Morning Livestock Market Update - Cattle Futures Likely Mixed

GENERAL COMMENTS:

Cash trading finally took place late Friday but not with the volume that had been expected. Trade was still light but higher. Cash prices increased $1.00 to $2.00 from the previous week. Packers needed to step up, but overall trade remained light. Traders were quick to jump on futures as cash looked more promising. With the market adjusting Friday, it is likely futures may trade mixed Monday as it is unlikely futures will challenge the highs unless further support is seen from underlying cash. Boxed beef prices were lower with choice down $0.22 and select down $1.83. Feeder cattle contracts for October and later established new contract highs as the market remains bullish over a tight supply as time progresses. The Commitment of Traders showed funds selling 6,034 live cattle contracts, bringing their net-long futures positions to 100,581. Funds increased their long positions in feeder cattle by 221 futures contracts, bringing their net-long positions to 14,433 futures.

Hog futures were able to buck the trend of the second half of the week to close higher. This was likely the result of positioning ahead of the weekend even though cash and cutouts were lower. The pattern has been for higher cash and cutouts earlier in the week and traders may have had that in mind. The National Direct Afternoon Hog report showed Friday's cash down $0.88 with cutouts declining $1.94. The Commitment of Traders report showed funds adding 3,908 long futures contracts bringing their net-long positions to 30,482 contracts.

	BULL SIDE		BEAR SIDE
1)	Feeder cattle futures made new high closes in the August and September contracts while making new contract highs in October and later contracts. This should keep technical traders bullish, and the market supported.	1)	Outside market influences may again cause volatility for cattle as traders wait to see cash direction again this week.
2)	Cash cattle trading higher and with light volume should keep traders interested in holding and adding to their long positions. Packers may need to purchase a higher volume of cattle this week.	2)	Packers continue to hold back on cattle slaughter in the attempt to improve margins. This may limit upside price potential.
3)	Cash hogs should trade higher to begin the week as packers have been interested in purchasing early to obtain the volume needed to maintain slaughter pace.	3)	Traders continue to grapple with the potential of demand through the end of the year as Prop 12 draws close to full implementation.
4)	Front-month August hog futures has a chart gap above the current prices that may be filled over the next week before the contract goes of the board.	4)	Hog futures will likely be pressured from lower cash and lower cutouts from Friday to begin the week.