Monday Morning Livestock Market Update - Mixed Activity as Traders Wait for Price Direction

GENERAL COMMENTS:

Feedlots were hoping for no worse than steady money Friday, but the pressure on boxed beef prices during the week and the packers slowing slaughter pushed them into selling the cattle that were ready for the market. Holding for higher cash has not been profitable over the past weeks as those cattle were sold at yet lower prices. Southern cattle traded $2.00 lower at $197 while Northern dressed cattle traded $2.00 lower at $313. Feedlots may have difficulty achieving steady cash under the current market environment this week. Boxed beef prices were mixed on Friday with choice up $0.65 with select down $0.08. Boxed beef prices are expected to be under pressure again this week. Feeder cattle continue to remain in strong demand. It will be interesting to see whether the good prices will hold. The Commitments of Traders report showed the fund traders as net sellers of 7,593 futures contracts in live cattle, bringing their net-long position to 120,010. The funds sold 1,688 feeder cattle futures contracts, reducing their net-long position to 26,9769.

Hogs plummeted on Thursday and Friday after making a valiant attempt to rally on Wednesday. Much of the bearishness seems to be the concern over the impact tariffs could have on pork exports. This has resulted in a $10.00 decline in hog futures over the past two weeks. Pork cutouts on Friday declined $2.54, increasing the concern over demand moving forward. Belly prices have been very volatile with a decline of $22.88 on Friday. The slaughter pace remains strong and packers need hogs to maintain the pace. The National Daily Direct Afternoon Hog report showed cash up $0.53 as packers were short-bought and needed to be more aggressive to procure the hogs they needed. The Commitments of Traders report showed the funds as net sellers of 22,527 futures contracts in hogs, reducing their net-long position to 89,218.

	BULL SIDE		BEAR SIDE
1)	Mixed boxed beef prices Friday may indicate prices may be low enough to stimulate consumer demand.	1)	Live cattle futures broke through and closed below support. The previous support level may now become resistance limiting upside price potential.
2)	Feeder cattle made a new high on Friday before selling pushed the market lower. The trend is still up.	2)	Feedlots face the decision of whether to sell cattle this week at the best price they can get or hold and possibly receive a lower price the following week.
3)	Hog futures are oversold and should see a relief bounce as selling may subside as the market may be overdone to the downside.	3)	Hog futures closed at another level of support. This will need to be held, or further selling will surface.
4)	Hog futures have a chart gap remaining substantially higher and chart gaps usually are filled.	4)	Traders may not want to do much before President Trump's address to a Joint Session of Congress on Tuesday, as they are uncertain what that may mean to the markets.