Monday Morning Livestock Market Update - Traders to Position For End of Month, Quarter

GENERAL COMMENTS:

Feedlots were able to band together and hold for higher prices last week. This sent cattle futures higher Thursday, but could not maintain follow-through strength on Friday. Traders made a valiant effort earlier in the day, but aggressive buying dried up, resulting in a mixed close. The packers may be increasing slaughter as a necessity to supply demand and needed to increase their bids to get cattle purchased. Cattle in the South traded $2.00 higher with Northern dressed cattle trading $3.00 higher. Boxed beef prices were mixed with choice up $0.32 and select down $0.29. The Commitments of Traders report showed funds purchasing 13,233 futures in live cattle, increasing their net-long positions to 57,010 contracts. They bought 1,921 futures contracts in feeder cattle, bringing their net-long position to 1,051 contracts.

Hog futures made a valiant attempt to regain the losses suffered Thursday, but could not hold the gains, resulting in a mixed close Friday. Futures could see selling pressure Monday as it is the end of the month and the end of the quarter and managed money traders close out the books. Some pressure could stem from the National Direct Afternoon Hog report showing a decline of $3.07 after a week of higher cash. However, some support should come from cutouts gaining $1.11. Packers continue to run a stronger slaughter pace, indicating strong demand. The Commitments of Traders report showed funds remained bullish as they purchased 13,955 futures, increasing their net-long position to 58,825 contracts.

	BULL SIDE		BEAR SIDE
1)	Fund traders are adding to their net-long position in anticipation of higher cattle prices as time progresses. They are buying for the long haul.	1)	Cattle futures did not follow-through Friday, even though October futures hold a discount to cash. Traders need to see further cash strength to improve their confidence.
2)	The trend is up in cattle futures with futures setting a high Friday before slipping back. Higher cash cattle and the possible increase in slaughter may provide further support.	2)	Boxed beef prices continue to have difficulty finding solid support. If this continues this week, the packers may hold the line on cash.
3)	The packers may not have been as aggressive Friday but might need to step up again this week to procure the hogs they need to maintain the strong slaughter pace.	3)	Further weakness in hog futures could break the uptrend and turn the market as fund selling could be triggered.