Tuesday Morning Livestock Market Update - Cattle Traders May Be Nervous Over Further Cash Weakness

GENERAL COMMENTS:

Cattle trade let loose on Friday and feedlots sold at lower prices. The recent weakness of futures and the prospect that packers were not stepping up made them decide to sell. Southern cattle traded $3.00 to $4.00 lower with Northern dressed cattle trading $5.00 to $7.00 lower. Those who held out may be under pressure to move cattle this week. Boxed beef prices closed lower with choice down $2.70 and select down $2.70. The Commitments of Traders report showed fund traders reducing their live cattle futures positions by 15,934 contracts to a net-long of 136,369. They added 375 contracts to feeder cattle, bringing their net-long to 27,156.

Hogs closed lower Friday, mostly due to positioning ahead of the three-day weekend. There is uncertainty over what international may surface daily but more so over an extended weekend. Traders may be willing to step back in today as the Monday National Daily Direct Afternoon Hog report showed cash up $1.28. Pork cutouts gained $0.48 with picnics the only category showing a decline. With good demand to begin the week, futures may find sufficient support to regain the losses. The Commitments of Traders report showed fund traders adding 7,658 long hog futures, bringing their net-long position to 102,388.

	BULL SIDE		BEAR SIDE
1)	Cattle futures may be low enough to generate some buying interest. After all, cattle numbers did not become more available.	1)	The liquidation phase of cattle may not be finished as continued lower futures are increasing selling.
2)	April cattle moved to technical support on Friday. This could generate buying interest.	2)	The significant decline in cash last week may generate further selling this week as feedlots that held out may sell this week before prices decline further.
3)	The packers being aggressive on Monday is a good sign of strong pork demand. Monday usually does not see much interest.	3)	Hog futures may decline further if the pattern of the past two months remains intact. Sharp retracements have followed gains in futures.
4)	Pork demand is benefitting from the continued high beef prices. Consumers have found value in pork.	4)	Hog futures may have difficulty moving to new highs anytime soon as the market has factored in supportive fundamentals.