General Comments:
Last week's trade set the stage for this week's trend. Live cattle futures still need to prove themselves by making new highs. Last week was a strong week with further strength expected supported by strong cash. Packers payed higher prices for cattle with less resistance than anticipated. That is a good sign for this week as higher prices will be needed to obtain more supply. Box beef prices average $7.00 higher for the week, indicating strong demand. The seasonal delay of a spring price rally is being made up for rather quickly. Demand factors are strong and further advances of boxed beef should support a strong rally in the cash market. Year-to-date beef export sales have reached 422,485 metric tons and is the highest on record for this time of year. Last year at this time the total was 337,281 metric tons.
Hog futures made new contract highs throughout 2021 contracts again of Friday. This has been nearly a daily occurrence. April through August contracts closed solidly above $100 with traders setting their sights on yet higher prices. April through August also left price gaps, which will be filled at some point. A price retracement will be needed to close those gaps and will likely take place before the end of the week. Packers remained aggressive last week, and there is no reason they will slow down this week. Projections for tighter supply and then confirmation of that tighter supply on the Hogs and Pigs report, will keep packers active. They cannot afford to step back as strong demand needs to be met. Year-to-date exports sales reached 779,498 metric tons, slightly higher than last year, but a new record high for the period.
| BULL SIDE | BEAR SIDE | ||
| 1) | Strong boxed beef prices mean packers will need to be more aggressive to fill demand. | 1) | Cattle futures have yet to break through and establish new contract highs. Those levels might be tough to exceed. |
| 2) | Bullish traders have bought the break and added to their long positions in anticipation prices will move higher. |
2) | The strong futures premium to cash may be a bit too much and may not hold over the next month. |
| 3) | There has been a buying frenzy for hogs and that does not appear to be slowing down anytime soon. There is a fear of tighter supply. | 3) | The price gap left in futures on Friday may be closed sooner rather than later. The market might correct further as it is overbought -- again. |
| 4) | Futures remain in a solid uptrend with no sign of technical resistance. There is also no sign of price resistance either as consumer demand remains robust. | 4) | It is a holiday-shortened week with increased demand for Easter being fulfilled. Traders may want to take some profits due to the end of the month, end of the quarter, and a long weekend. |
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