Wednesday Morning Livestock Market Update - WASDE Report May Influence Cattle Trade

GENERAL COMMENTS:

Live cattle futures held Tuesday as traders anticipate stronger cash again this week. The market was not tested sufficiently, leaving traders still guessing. Business is expected to be done Wednesday but probably not until after the World Agricultural Supply and Demand Estimates (WASDE) report is released and feedlots see what grain prices will do. There were some offers surfacing Tuesday in the South at $142 to $143 with nothing else posted. Boxed beef continued to weakness with choice down $1.50 and select down $1.20. Steer and heifer calves are in strong demand with higher prices being paid and lower numbers available.

There seems to be nothing to derail the strength of hogs with new contract highs being made on nearly a daily basis. Traders show no concern of an overbought technical market as they are trading the strength. The large drop of cash on Monday was nearly reversed yesterday with a gain of $7.99 on the National Direct Afternoon report. Hog slaughter is increasing, but slaughter Tuesday was less than the previous week as well as a year ago. Either the workforce is not yet back up to full numbers or packers are having a difficult time obtaining a sufficient number of hogs. It is unclear how much impact on supply is the result of the protests in Canada with truckers blocking or restricting supply routes.

	BULL SIDE		BEAR SIDE
1)	Cash is expected higher again this week, which is keeping futures supported.	1)	Cash strength may be influenced by the impact on grain prices after the release of the World Agricultural Supply and Demand report. Feedlots may be more anxious to sell if the report is bullish for grain prices.
2)	Packers will need more cattle to keep chain speeds running at the current level. Some cattle are already contracted ahead but not enough to keep plants supplied.	2)	Continued weakness of boxed beef may limit the amount packers are willing to pay for cattle.
3)	Hog futures continue to show incredible strength in anticipation of tighter supply. New contract highs keep traders buying aggressively.	3)	Hog futures seem to be in a state of frenzy with April increased nearly $20.00 over the past month. Many times, markets will fall faster than they went up.
4)	Even though cash is volatile, it continues to advance. Packers cannot afford to be complacent as they need pork to meet demand.	4)	Price gaps remain on the charts significantly lower in April and June that may be filled before the contracts go off the board.