Monday Morning Livestock Market Update - Choppy Trading Activity Expected

GENERAL COMMENTS:

Hopes for higher cash cattle trade on Friday did not materialize with prices remaining at Thursday's levels. Southern cattle traded $1.00 higher for the week with Northern dressed cattle at steady money. Futures had it already factored in, leaving live cattle futures drifting lower. Feeder cattle futures closed higher in deferred contracts, likely as a reaction to lower grain prices and expected continued lower grain prices based on the WASDE report. The WASDE report was supportive of beef prices for the rest of this year and next year. These are just estimates and will change from month to month based on the strength or weakness of prices and did not have much influence on Friday's trading activity. Boxed beef prices were mixed with choice up $1.27 and select down $2.01. The Commitments of Traders report showed funds added 10,076 long futures in live cattle, increasing their net-long position to 77,964 contracts. They added 1,646 futures positions in feeder cattle, bringing their net-long position to 6,449 contracts.

Hog futures continued their strength making new highs and closing at the highest level since May on Friday. The National Direct Afternoon Hog report only showed the average price of $74.34 and did not report a change from the previous day. Pork cutouts declined $0.40 from Thursday. The WASDE report was mixed for hog prices and production but none of this mattered Friday as traders remain bullish on the market. The recent price correction relieved some of the overbought status of futures, giving traders confidence to add to their long positions. Monday is the last trading day for the October contract. The Commitments of Traders report showed the funds increasing their long positions by 14,429 contracts and a net-long position of 78,270 contracts. This is 20,000 contracts shy of the record set in September 2023.

	BULL SIDE		BEAR SIDE
1)	Cattle futures remain supported by tight cattle supplies and good demand. Demand is expected to remain strong through the end of the year.	1)	The cattle market is technically overbought and may be due for a price correction.
2)	Feedlots will try to hold for steady to higher cash this week as the packers likely have not purchased many cattle for deferred delivery.	2)	The feedlots have been holding cattle for higher prices and may need to move them more aggressively as they have been gaining weight and costing more money to maintain.
3)	Traders are optimistic about hog prices and continue to add positions for the long term. The supply of hogs may not be as much as estimated in the latest report.	3)	Cash hogs and pork cutouts have not been trending higher, which may limit the upside price potential of futures.
4)	The October hog contract goes off the board Monday with December taking over as the front month. It is carrying a discount that may be reduced.	4)	The nearing of contract highs and the substantially long position of the fund traders could trigger profit-taking in hog futures on any bearish news.