Monday Morning Livestock Market Update - Traders Are Expected to Support the Cattle Market

GENERAL COMMENTS:

Cattle traders were desperately looking for something to cause them to hold positions through the end of the month. The uncertainty of cash trade and the biannual Cattle Inventory report left them taking some profits ahead of the weekend. Cash cattle trade developed late, with Southern live prices trading as much as $5.00 higher, while Northern dressed cattle traded as much as $9.00 higher. That should provide support to begin the month. Packers were short-bought and should remain aggressive due to tight cattle supplies. The biannual Cattle Inventory report was not bearish to the market, showing all cattle and calves down slightly from a year earlier at 86.2 million head. Cows and heifers that have calved totaled 37.2 million, also down slightly from a year earlier. Beef replacement heifers totaled 4.71 million head, 1% above a year earlier, but that will not hurt the market. The calf crop was 2% lower at 32.9 million head. Boxed beef prices were mixed on Friday, with choice down $2.10 and select up $1.22. The Commitment of Traders report showed the fund traders adding 2,928 live cattle futures positions, increasing their long positions to 104,399. They added 1,460 long positions to feeder cattle, bringing their net-long position to 18,865 contracts.

Hog futures closed mixed with slight pressure on contracts through August, while later contracts again posted new highs. Traders had little to turn the market one way or the other. The National Daily Direct Afternoon Hog report showed cash down $0.81 and was not unexpected. Pork cutouts were higher, posting a gain of $0.79. Packers had no difficulty obtaining the hogs they needed to maintain the higher slaughter pace. The Commitment of Traders report showed that the interest remains for fund traders to add to their long positions. The net-long position totaled 109,537 futures contracts, up 17,321 contracts from the previous week.

	BULL SIDE		BEAR SIDE
1)	Cash cattle traded higher last week, which should provide support to futures. It is also a new month and may increase buying interest.	1)	Feeder cattle have been close to closing the chart gap but have been unable to do so.
2)	The biannual Cattle Inventory report was not bearish, showing cattle numbers will remain tight for some time to come.	2)	Boxed beef prices have been mixed last week. If that continues, it may limit the upside potential for futures.
3)	Hog slaughter remains very strong and indicates that demand for pork is strong. This will keep supplies from backing up in the country.	3)	Cash hogs are unable to find a solid footing, and prices remain choppy.
4)	Later futures contracts continue to make new highs with traders adding to their long positions.	4)	Hog slaughter is strong and higher than a year ago, but it is not enough to tighten the hog supply in the country.