Friday Morning Livestock Market Update - Futures May Coast Into the Weekend

General Comments:

Feeder cattle took away the gains of Wednesday while live cattle futures lost more ground. April live cattle closed at the lowest price since Jan. 15, which may keep the recent bearish tone intact. Cash not being able to post any higher prices, and in some cases lower than last week, may not trigger any short-covering into the weekend. The idea for higher cash next week has basically fallen off the table. Feedlots realize that holding out for higher cash did not net any benefits and actually cost them some money. This could bring a few more cattle to the market Friday as some feedlots might be worried prices could be lower next week due to floundering boxed beef and lower futures. Weekly export sales of beef were a bit better than the previous week, but not enough to light a fire under the market.

Hog futures were mixed with deferred contracts showing strength as hog supplies are expected to tighten as the year progresses. The uptrend remains intact, but could be challenged next week if packers become less aggressive. Cash prices were expected to be steady this week, but the opposite was true as packers were very aggressive, increasing bids daily. Weekly export sales needed to be strong in order to keep solid support under the market and export sales were exactly that. Sales were back on track with China being the largest buyer. Even if packers decide to hold the line on bids, futures should remain supported and could begin to carve out a sideways trading range. Saturday slaughter is projected at 100,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash cattle traded steady to lower, but next week is another week in which packers will need to keep plants running and demand satisfied. It may take higher cash to get it done.	1)	Live cattle futures just cannot generate enough buying interest to turn the trend back up. April making a new low again does not bode well.
2)	Futures are now oversold and a little better exports sales report Thursday could bring traders back in to buy the break.	2)	Weekly beef export sales were better than the previous week, but not as strong as was hoped. This increases the concern that beef could begin to back up.
3)	Hog futures continue to hold the uptrend despite some choppiness of cutout prices. Funds are long and remain committed to the market.	3)	Packers may soon bid steady prices for hogs as they have purchased quite a substantial amount. That could move futures sideways at best.
4)	Exports sales rebounded possibly, indicating the low sales report last week was merely an aberration. China remains an active buyer.	4)	The choppiness of hog futures over the past week may indicate the market is tired and ready for a significant price correction.