Monday Morning Livestock Market Update - Traders May Be Cautiously Optimistic

GENERAL COMMENTS:

Packers raised bids to accomplish the buying of cattle needed for the week. Cattle in the South traded at $170, which was still $1 lower than last week but $2 above where it traded earlier in the week. Northern dressed cattle traded $2 to $3 lower. However, the fact that cattle traded higher than earlier in the week lends itself to the idea that the low may be in for now and feedlots may have more confidence to hold for better prices this week. It is the last full week of slaughter before the end of the year. Boxed beef closed mixed with choice down $0.68 and select up $2.56. The Cattle on Feed report will be released Friday, but it is too early for traders to focus on that. The Commitment of Traders report showed funds selling 4,656 live cattle futures contracts, bringing their net-long futures positions to 22,233 contracts. Funds increased their long positions in feeder cattle by 156 contracts, trimming their net-short futures positions to 1,663 contracts.

Hog futures continued to find buying interest on further optimism about demand through the holidays. Cash and cutouts did not support the strength with technical buying and short-covering providing the support. The April contract was able to close the chart gap that remained since Nov. 24. The National Direct Afternoon Hog report showed cash down $1.22 with a weighted average of $47.99. The market will need to prove itself before it can trend higher as both cash and cutouts need to indicate stronger domestic and international demand is taking place on a more consistent basis. The Commitment of Traders report showed funds trimming their long positions by 1,461 futures contacts, bringing their net-short positions to 18,430 contracts.

	BULL SIDE		BEAR SIDE
1)	Cash cattle trading above the lows of earlier in the week may indicate the recent slide of cash has come to an end.	1)	The overall trend of boxed beef is lower and may remain that way through the end of the year.
2)	Feedlots may have more confidence to hold for higher cash due to the recent strength of futures and packers bidding up Friday.	2)	The holiday period will limit slaughter schedules and may limit beef demand.
3)	Hog pushed higher the last half of the week as optimism increased over demand through the holiday season.	3)	Lower cash and lower cutouts Friday may put pressure on hog futures Monday.
4)	April futures closed the chart gap and closed above the gap which could increase technical buying interest.	4)	April hog futures closing the chart gap may now be vulnerable for technical selling as there are no more gaps remaining above the market in any contract.