Friday Morning Livestock Market Update - Markets Poised for Further Gains

General Comments:

Cash cattle activity has been active with trade to finish out the week with higher prices. Feedlots have been holding for better prices with futures supporting that activity. Boxed beef prices held well in spite of bearish news. Live cattle futures closed at the highest level they have been since early March just before prices fell off the face of the earth and have been struggling ever since. A big supply of meat is expected to come in over the next few weeks, but traders and feedlots hope it can be absorbed and prices remain in an uptrend. Caution will be exercised by technical traders as this could be a false breakout that may not be maintained.

Hogs may be benefiting from the idea that demand from China may be able to keep supply from overwhelming the market. The supply of pork remains high, but higher cutouts have limited the overarching bearishness the market has been carrying for quite some time. There was some spillover buying interest from the livestock complex pushing futures to the highest level in a month. This is expected to continue Friday.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures broke out to the upside, reaching back to the highest level since early March. This may trigger further technical buying.	1)	Live cattle futures will need to maintain current strength or risk falling back below technical support opening the way for renewed selling.
2)	Higher cash prices, even though beef supply is burdensome, gives the impression demand is being maintained and higher beef supply is being absorbed.	2)	There is a discrepancy in the cattle balance sheet of about one million head of cattle that seem to have dropped off the reported numbers. This will continue to keep a somewhat bearish lid on price potential unless these cattle show up on future reports.
3)	Strong exports sales for pork support the idea China will continue to purchase thereby relieving concerns over continued large supplies.	3)	There are a lot of hogs that will continue to come to the market over the next few months. This may keep any price increase short-lived.
4)	Traders are optimistic as futures continue to hold a premium over cash. This optimism should keep packers willing to keep prices steady to stronger as pork supply is moving.	4)	The overall price trend established since late January is still down. This will be difficult to overcome as traders will continue to sell price rallies unless proven otherwise.

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