It was another difficult week for cattle as futures continued the losses. Cash cattle traded lower for the first time in quite a few weeks. Southern live cattle traded $2.00 lower at $206 with Northern dressed cattle $1.00 lower at $328. Traders expected further weakness in cash as the February live cattle contract is trading over $5.00 below cash. Various news stories last week put pressure on the market, which may increase the desire of feedlots to move cattle rather than risk holding and taking yet lower prices. Boxed beef prices were lower with choice down $2.11 and select down $1.87. Consumer demand may be backing off due to the high beef prices. Feeder cattle prices at some auctions last week were lower in response to the weakness of live cattle. The Commitments of Traders report showed funds selling 4,533 futures in live cattle, reducing their net-long positions to 152,303. The funds sold 946 contracts, reducing their net-long position to 26,781 contracts.
Hog futures continue to hold in nearby contracts and push higher in the deferred contracts. The July and later contracts made new highs Friday as traders maintained their optimism. Cash was lower Friday with the National Daily Direct Afternoon Hog report showing a decline of $3.06. This was offset to some extent by the gain in pork cutouts of $1.36. Cash hogs continue to struggle but traders are looking ahead to the prospects of increasing demand. Slaughter continues to exceed the level of the previous week and year. The last trading day for February hog futures is on Friday. The Commitments of Traders report showed the funds adding 6,031 long positions, bringing their net-long futures position to 94,730 contracts.
| BULL SIDE | BEAR SIDE | ||
| 1) | Live cattle futures hold a significant discount to cash. This may limit further selling until cash is traded this week. |
1) | The potential for further tariffs being imposed will remain a dark cloud over the cattle market, limiting upside potential. |
| 2) | The cattle market has corrected its overbought condition with the news of last week potentially factored into the market. This could generate a price bounce. |
2) | Cattle futures ran too high, too fast, and are now correcting. Further weakness is possible as the market corrects. |
| 3) | Some hog contracts continue to make new highs, keeping the uptrend intact. Traders anticipated increased demand as the year progresses. |
3) | The strength of hog futures seems to be in the perception of traders for better demand. It is not fully supported by cash and cutouts. |
| 4) | Hog slaughter remains strong with packers needed to meet demand. This is keeping hogs current. |
4) | Packers may not be aggressive in the cash market as they assess weekend pork demand. |
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