Monday Morning Livestock Market Update - No Definite Direction to Begin Week

GENERAL COMMENTS:

Limited cash trade took place by the end of Friday, providing limited direction for traders. Cash cattle traded $1.00 lower in the South at $185 and steady in the North at $301 dressed. This was about as expected earlier in the week and should not surprise the market. Boxed beef prices were higher with choice up $0.54 and select up $0.31. Boxed beef prices are holding well as consumer demand remains strong. Feeder cattle futures bounced to close the chart gaps made Thursday. The Commitment of Traders report showed funds selling 5,120 live cattle futures contracts, leaving them net long 56,642 contracts. Funds sold 3,360 feeder cattle contracts, reducing their net-long position to 3,336 contracts.

Nearby hogs bounced slightly during the second half of last week but did not indicate a bottom had been reached. Packers were not aggressive on Friday with the National Direct Afternoon Hog report down $0.25 with a weighted average of $85.98. This was offset slightly by a gain in cutouts of $0.22. This does set the stage for a bullish scenario for this week. The market is oversold, but without solid support it may remain that way for a time. The packers may not be aggressive Monday as they wait for indications of weekend pork movement. The Commitments of Traders report showed funds trimming their long futures position by 12,041 contracts with a current net-long position of 19,026 contracts.

	BULL SIDE		BEAR SIDE
1)	Steady cash trade in the North indicates packers needed cattle and were unable to hold out for lower cash. This may be the same again this week.	1)	Cattle futures bounced Friday but the buying interest seemed to lack conviction. It could not hold the initial strength of the day.
2)	June live cattle futures hold a discount to cash, which may be trimmed in the coming weeks if cash cattle holds at the current price.	2)	The packers may not be very aggressive this week as beef demand generally slows as temperatures increase.
3)	Hog futures cannot decline forever and with the market extremely oversold a retracement could unfold.	3)	Both cash and pork cutouts continue to struggle even at these lower prices. There are sufficient hogs available at heavier weights.
4)	Lower pork prices should stimulate demand when consumers compare the value to beef.	4)	Fund traders continue to liquidate their long futures positions, pushing futures to the lowest levels since the beginning of the year. The selling has been relentless since April.