Monday Morning Livestock Market Update - Futures May See Further Support

GENERAL COMMENTS:

Live cattle futures increased during the day Friday due to the positive news of higher cash cattle trade. Northern dressed cattle traded $2.00 higher and Southern live cattle traded $2.00 to $3.00 higher. Feedlots were rewarded for holding out. This news generated buying interest from traders as futures adjusted closer to cash. Higher cash became the focus of traders rather than the caution over the Cattle on Feed report. The report was neutral with on-feed numbers at 101% compared to the estimate of 100.7%. Placements were 99% compared to the average estimate of 98.5%. Marketings were 96% compared to the average estimate of 96.6%. Boxed beef prices were higher with choice up $0.63 and select up $0.33. Feeder cattle did not share the same sentiment as live cattle with futures closing mixed Friday. The Commitments of Traders report showed fund traders reducing their long position by 545 contracts to a net long of 43,777 live cattle futures contracts. The fund traders purchased 1,738 futures contracts in feeder cattle, reducing their net-short position to 870 contracts.

Hog futures showed limited price movement Friday as traders had little new fundamental news to move the market. It was a solid week overall and traders seemed content with their positions going into the weekend. The National Direct Afternoon Hog report was surprising with cash increasing $0.61 to close the week at $76.88. Pork cutout values showed a decline of $0.66. The Hogs & Pigs report will be released Thursday, but it is too early for traders to position themselves ahead of the report. The Commitments of Traders report showed funds buying 3,160 futures contracts increasing their net-long futures position to 44,870 contracts.

	BULL SIDE		BEAR SIDE
1)	Feedlots will increase their resolve to hold for higher prices this week due to gains achieved last week.	1)	If packers purchased a significant number of cattle for deferred delivery, they may not need to be aggressive this week.
2)	The October live cattle contract closed above chart resistance Friday, which may increase buying interest of technical traders.	2)	Feeder cattle were reluctant to follow live cattle futures higher. This may indicate limited upside potential to begin the week.
3)	Hog futures closed higher for the week with minimal fanfare. Fund traders added to their net-long futures positions, indicating their confidence for higher prices.	3)	Both cash hogs and pork cutouts remain variable with the uncertainty possibly limiting upside potential.
4)	Higher cash hogs Friday are unusual, showing packers needed hogs to finish out the week. This may be an indication of stronger prices this week.	4)	Hog supplies are ample, leaving the packers with limited reason to be aggressive in the cash market.