GENERAL COMMENTS:
Beef cutout values saw a $2.21 jump for choice to start off the week, while select fell 17 cents. The Feeder Cattle Index also saw $1.55 gain at $338.62. Live cattle futures saw some small gains in the deferred contracts Monday while the nearby contracts were 0.225 to 0.45 cents lower.
Hog futures saw a small bounce Monday after Friday's lows. With pork cutout prices $2.47 higher on Monday, there is hope that the futures market will find support here. Friday's Commitment of Traders report showed a net change of 9,131 contracts as managed money finally lifts some of their shorts. The previous week's net-short position of 50,635 contracts was the record net short.
| BULL SIDE | BEAR SIDE | ||
| 1) | Friday's corn prices fell dramatically after a disappointing World Agricultural Supply and Demand Estimates (WASDE) report, helping margins for cattle producers and supporting bids for feeder cattle. | 1) | The October feeder cattle contract is currently at a $4.85 premium to the Feeder Cattle Index, which is a red flag for nearby futures. |
| 2) | Technicals for both live cattle and feeder cattle are strong and supportive for higher price action. | 2) | Mexican feeder cattle imports continue to grow with 31,700 head estimated to have crossed through the Douglas/Santa Teresa ports so far this year. |
| 3) | Managed money has begun lifting some of their record net-short positions in the hog market, reducing pressure on futures market. | 3) | Hog slaughter remains above last year's levels leaving more pork supply available to consumers. |
| 4) | Pork cutout values increased again Monday, giving relief to the futures market. | 4) | CME Lean Hog Index was lower, along with Daily Direct Hog reported prices, which will suppress market friendliness until these begin to improve as well. |
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