Friday Morning Livestock Market Update - Weekend Profit Taking Expected in Hog Futures

GENERAL COMMENTS:

Boxed beef prices continued higher but that was not enough to support the market after cash traded generally steady for the week. Traders are cautious over the potential for cash prices over the next few weeks. The market looks more bullish over the long term, but with packers purchasing the required cattle for immediate slaughter as well as for the next few weeks, it leaves the market with potentially limited upside. Boxed beef prices continue higher, but that is not translating into cash prices. Heavier cattle weights and plentiful supply for the near term leaves the market is the position of limited upside. Trading activity may be two-sided as the market moves into the weekend.

Hogs are on a roll with the strong uptrend and new contract highs pulling more traders into the market and forcing short covering. The rally Thursday was not supported by stronger cash as the National Direct Afternoon report showed a decline of $3.72 after two days of strong gains. Cutouts also showed weakness with a decline of $3.23. The July contract was able to close above $104. Traders are concerned over tightening supply as the year progresses and are anticipating what it will take to purchase hogs for domestic and export demand through the first half of the year. Saturday hog slaughter is a moving target with the current estimate for slaughter at 215,000 head.

	BULL SIDE		BEAR SIDE
1)	Boxed beef continues higher with prices moving to the highest level since early October. This should support the market.	1)	Once April cattle close the chart gap above the market, futures may slide lower due to the lack of current cash support.
2)	There are some signs that slaughter pace is picking up. As slaughter increases, so will the need for more cattle.	2)	Some cattle already being forward contracted for the next few weeks leaves little support for higher cash next week.
3)	Hogs continue to make new highs as traders seem confident supplies will tighten during the first half of the year.	3)	Some hog contracts left a gap Thursday that will be closed sooner rather than later. The sharp rise this week may run out of steam Friday.
4)	Bullish weekly export sales would continue to support the market.	4)	Hog futures are overbought and ripe for a correction after an incredible week of price increases.