Monday Morning Livestock Market Update - Traders Will Assess Weekend Product Demand

GENERAL COMMENTS:

Cattle spent a brief period in positive territory but succumbed to the disappointment of cash and traders liquidating long positions ahead of the weekend. There were hopes of higher cash trade last week, but the result was an average of $185 in the South and $292 for Northern dressed cattle. This is generally steady with the prior week. There were few traded at $294, but those were late. Traders likely will not buy back into the market with any aggressiveness to start this week but will wait to see how boxed beef demand was over the weekend. Boxed beef prices were lower Friday with choice down $2.19 and select down $2.33. Feeder cattle lead the losses Friday of over $2.00 in nearby months. The January and March contracts failed to close the chart gaps, likely triggering sell orders sending the market lower. The Commitment of Traders report showed funds liquidated 6,674 live cattle futures positions, bringing their net-long futures positions to 56,029 contracts. Funds sold 2,660 feeder cattle futures contracts, moving their net-long futures positions to 676 contracts.

Hog futures turned tail after moving higher early Friday. The recent impressive rally might have run its course if greater fundamental support does not develop. This could have been just some liquidation into the weekend, but the weakness of cash and lackluster cutout prices do not bode well for early trade. The National Direct Afternoon Hog report showed cash down $1.31, pushing the weighted average down to $67.18. Cutouts did not see quite as much pressure with prices down $0.13. Traders may be slow to pick a price direction as they may have waited to see pork movement over the weekend. The Commitment of Traders report showed funds increased their long positions by 7,992 futures contracts, bringing their net-long positions to 1,441.

	BULL SIDE		BEAR SIDE
1)	February and later live cattle futures have chart gaps remaining above the market. January and later feeder cattle contracts also have chart gaps above the market that may be filled.	1)	The rally of cattle futures may be running out of steam as traders wait to see if further strength is possible. Funds have trimmed their long positions.
2)	Cattle numbers remain tight and may limit losses for the foreseeable future. Cash should be no less than steady this week.	2)	Higher corn prices may keep some pressure on feeder cattle with buyers at auctions a bit less aggressive.
3)	Hog futures have had an impressive rally outside the fundamental support of cash. Traders seem to be more friendly for the long haul, buying into the market.	3)	Hog futures may have run their course, unless both cash and cutouts see some consistent strength develop over the next few weeks.
4)	Hog slaughter remains strong and above year ago levels. This keeps hogs from backing up in the country and indicates demand is utilizing the available pork.	4)	Traders may be hesitant to buy aggressively to begin the week until they see a need to do so. Packers are not expected to be aggressive.