Monday Morning Livestock Market Update - Early Trading Activity to Show Uncertainty

GENERAL COMMENTS:

Last week was a brutal week for cattle as liquidation gripped the market when cash traded lower. Southern live and Northern dressed cattle traded $2.00 lower, triggering the selling. Thankfully, futures bounced significantly from their lows, but technical damage was done. A sharp rebound is unlikely and packers will use it to their advantage as they bid lower for cattle this week. It seemed as if the selling of futures was magnified by the losses sustained in the stock market last week as traders looked at the outside markets for direction. Boxed beef was mixed with choice up $0.98 and select down $0.29. The Commitments of Traders report showed funds adding 12,675 long futures live cattle positions to increase their net-long positions to 79,393 contracts. They sold 1,128 feeder cattle futures contracts, reducing their net-long positions to 1,653.

Hogs closed under pressure with minimal losses in nearer months but triple-digit losses in contracts for June 2025 and later. Both cash and cutouts were lower to close the week, but held well during the week. Futures may be finding a level of stability with the market potentially moving in a sideways pattern for now. The National Direct Afternoon Hog report showed cash down $1.16. If the pattern of the past few weeks remains intact, the packers should be aggressive Monday, bidding more aggressively to obtain hogs early in the week. Cutouts were lower with a decline of $1.55. The Commitments of Traders report showed funds buying 11,287 hog futures contracts moving them to a net long of 5,129 contracts.

	BULL SIDE		BEAR SIDE
1)	Cattle futures fell more last week than the weakness seen in cash trade. A rebound in the stock market may bring traders back into the market more aggressively as buyers.	1)	The heavy liquidation last week may have set the stage for further weakness in cattle futures.
2)	The rebound of cattle futures from the lows Friday may indicate the liquidating pressure may have run its course. Traders might see this as a buying opportunity.	2)	Traders may anticipate lower cash this week, leaving little reason for cattle futures to see much upside price potential.
3)	Hog market fundamentals have improved with packers being more aggressive and slaughter pace remaining strong.	3)	Hog futures may move in a sideways pattern for the time being. Technical resistance may limit the upside potential.
4)	The packers may again want to purchase hogs early and bid higher to obtain them. Higher cash and potentially higher cutouts may support the market.	4)	The packers were rather aggressive last week, which may leave them less aggressive in Monday's cash market.