Monday Morning Livestock Market Update - Traders May Cautiously Move Futures Higher

GENERAL COMMENTS:

Cash cattle traded higher Friday and traders bought livestock futures aggressively, thinking the bottom might have been reached. Northern dressed cattle traded $2.00 higher with Southern live cattle $1.00 higher. This is what traders were waiting for and once it came to fruition, it turned into aggressive buying. Live cattle futures regained the losses of more than a month. The August and later feeder cattle futures closed at new contract highs. The market is alive and well, having digested the concerns over the impact of tariffs and beef exports. The April live cattle contract added premium to cash on the idea that feedlots will try to hold for higher cash this week. Boxed beef prices were higher with choice up $1.78 and select up $2.29. The Commitments of Traders report showed funds selling 9,486 live cattle futures contracts, bringing their net-long position to 110,524. Fund traders added 611 long feeder cattle positions to increase their net-long to 27,580 contracts.

Hog futures showed strength Friday due to the stronger cutout prices and the further delay of tariffs on Canada and Mexico. The tariff news is getting to be tedious and old news with the market looking for something else to focus on. As long as demand remains good, prices may find support. Cash was lower with the National Daily Direct Afternoon Hog report showing a loss of $1.88. Lower cash was expected, along with the potential for lower cash Monday as the packers assess weekend demand. Pork cutouts increased $1.87 with each category higher. The Commitments of Traders report showed the funds selling 32,890 futures contracts, reducing their net-long position to 56,328.

	BULL SIDE		BEAR SIDE
1)	Feeder cattle futures made new contract highs Friday, which may increase further buying interest from traders.	1)	Traders added extra premium to the April live cattle contract relative to the cash price. This may limit further gains unless cash trades higher.
2)	Higher cash last week will provide feedlots more confidence they may be able to get higher cash again this week. The bottom may have been reached.	2)	The upside in cattle may be limited as higher prices for beef may not be sustainable as consumers deal with higher food prices.
3)	Tariffs on Canada and Mexico being delayed should keep pork exports steady and pork moving. These tariffs have already been delayed twice, it is possible they may not be implemented at all.	3)	Hogs have been under pressure and the recent increase may be short-lived unless cutouts show consistent strength.
4)	Fund traders have liquidated a lot of long positions and may now turn more aggressive buyers as the export tariff situation is becoming old news.	4)	Packers generally are not aggressive Monday and today should be no exception. They will wait to see weekend demand before becoming more aggressive with hog purchases.