GENERAL COMMENTS:
Cash cattle traded steady last week which may provide some optimism to begin the week. Maybe the weakness of cash has run its course, and stability will return to the market. However, the continued weakness of boxed beef is a concern. Prices were lower on Friday with choice down $2.27 and select down $1.47. If boxed beef shows further weakness during the week, it is doubtful that packers will pay more for cattle and a further reduction of slaughter will be seen. Cattle continue to be purchased for deferred delivery keeping packers from having to purchase cattle aggressively to fill slaughter. The feedlots will try for nothing less than steady money again this week. The Commitment of Traders report showed fund traders added 1,659 futures contracts in live cattle to increase their net long position to 44,322. Fund traders were net sellers of 1,346 feeder cattle futures contracts moving their net short position to 2,608 contracts.
Hog futures had a choppy week and closed not much different than the week began. Traders had little to focus on Friday which left the market drifting. The National Direct Afternoon report showed cash unchanged from the previous day. The packers were able to purchase hogs last week without having to be aggressive which kept futures choppy. Pork cutout values declined $0.28 finishing out a week of mostly lower prices. Futures were either building support or finding resistance last week. This week may indicate which and will be influenced by cash. The Commitment of Traders report showed fund traders reducing their net long positions by 720 futures contracts with the net long position now at 41,710 contracts.
| BULL SIDE | BEAR SIDE | ||
| 1) | Last week's steady cash cattle trade may provide traders the confidence to buy futures and narrow the price gap between futures and cash. | 1) | Cattle futures were unable to move higher last week with upside price potential limited. |
| 2) | Feedlots may hold for higher prices this week as they were able to achieve steady cash trade last week. | 2) | Boxed beef prices continue to show weakness as demand remains somewhat lackluster. Even signs of economic improvement were not able to push prices higher. |
| 3) | Hog futures traded in a sideways range last week and may have built support. The downside may be limited. | 3) | Hog futures could not break out to the upside last week indicating prices may have reached a threshold at the top of the range. |
| 4) | The strong Saturday slaughter may bring the packers in more aggressively at the beginning of the week as they will need hogs to maintain the slaughter pace. | 4) | Pork cutout prices have not found consistent support limiting upside price potential. Demand is good, but not good enough. |
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