Monday Morning Livestock Market Update - Potential Stronger Start to the Week

General Comments:

Cattle futures closed last week on a strong note. October and later live contracts pushed to new highs as optimism seems to be growing for increased demand and tighter supplies later in the year. The seasonal cash price rally in the spring might have a difficult time unfolding at the present pace of cash. April futures seem to want to influence packers to spend more money, but the price chart is pointing sideways to lower. Futures carry a premium to cash with plenty of time to see this price come to fruition if packers need to buy cattle over the next month. Some of the strength Friday can be attributed to the winter storm that moved into cattle country over the weekend. This will likely influence trade Monday as heavy snows created further headaches and difficulties for feedlots. This could result in reduced cattle weights and could be the catalyst needed to cause packers to be more aggressive.

Hog futures did not share the same optimism as cattle, but neither did they back off. May and later contracts were able to eke out new contract highs Friday but were not able to close there. The market may begin to see some hesitancy as packers seem to indicate they may not be as aggressive as they have been. Pork cutouts fell on Friday with increasing choppiness in the cash market many times indicating a possible change in trend. However, strong export demand may underpin the market for the time being.

	BULL SIDE		BEAR SIDE
1)	Cattle futures show the trend has turned back up. Later contracts have moved to new highs, which should increase buying interest from traders.	1)	April live cattle futures continue to hold a significant premium over cash as traders believe in a seasonal price rally. However, futures seem to indicate stronger prices later rather than sooner.
2)	The winter storm will have an impact on cattle weights and could slow beef production for the near term. Packers may need to bid up to obtain sufficient animals for processing.	2)	There has been much hope the past five weeks for higher cash, but that has not materialized even after the big storm in February. Now, there has been another big snowstorm that may have feedlots more anxious to sell rather than follow a repeat of last time.
3)	Hogs did not close Friday with as much fanfare as most of the week, but May and later contracts establishing new highs still indicates strong support.	3)	Cash hogs may be running out of steam as was seen later last week. Packers may be comfortable with current supply and may pay less for the time being.
4)	Export demand remains strong and domestic demand may improve now that stimulus checks will again be in the hands of consumers.	4)	Futures are again in overbought territory with the market ripe for a price retracement.