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

GENERAL COMMENTS:

The holiday-shortened week impacted cash cattle trading activity but the packers did not make up for one less day of cash trading by stepping up on Friday. Limited trading took place even though the packers seemed short-bought coming into the week. Cash cattle traded late Friday with prices in the South at $190 and dressed cattle in the North at $314 and mostly steady with the previous week. This will make it an interesting week with an initial anticipation of higher cash. Feedlots were willing to hold cattle for another week, anticipating packers would need to step up. Boxed beef prices were higher with choice up $0.59 and select up $0.68.

Hog futures could not hold up Friday as cash weakness leaves little reason for traders to get excited over the market. The National Direct Afternoon Hog report showed cash down $1.52 with a weighted average price of $89.45. There are plenty of hogs available to the market to meet demand. Export sales were a marketing year high at 59,100 metric tons (mt), but failed to generate aggressive buying interest in futures. Cutouts were higher, posting a gain of $1.28. The packers may be more aggressive Monday as they may purchase early to procure many of the hogs they need for a full week of slaughter rather than wait to see the movement of pork during the holiday.

	BULL SIDE		BEAR SIDE
1)	Cash cattle remained steady with the previous week providing support for steady or higher cash again this week.	1)	It was somewhat disappointing that cash cattle did not trade higher last week after it was anticipated they would need to be more aggressive with purchases.
2)	Packers seemed short-bought coming into last week and not being aggressive during the week may put them in a position to purchase more aggressively this week to maintain slaughter and meet demand.	2)	Lower export sales of beef may be due to prices being too high. High prices cure high prices and the market may be near that level.
3)	Weekly pork export sales at a marketing year high may indicate international demand is increasing at lower pork prices. The packers may need to be more aggressive with slaughter and purchases.	3)	Both cash hogs and pork cutouts remain choppy without any solid price direction. This leaves traders unwilling to buy futures aggressively.
4)	Higher pork cutouts Friday could increase buying interest in futures with some anticipation the lower pork prices may have stimulated demand.	4)	Hogs remain plentiful, leaving little reason for packers to be aggressive in the cash market.