Monday Morning Livestock Market Update - Traders Will Exercise Caution

GENERAL COMMENTS:

Steady cash cattle trade last week, with business being done throughout the week, limited upside potential but also held support. Sad to say, there is not much hope for higher cash this week with cash trade potentially surfacing earlier rather than later. Packers have some animals contracted ahead and markets will not be open on Friday. Futures seem to be moving in a sideways range again which may continue much of this week. Boxed beef prices were lower on Friday with choice down $0.93 and select down $0.89. USDA raised their estimate for beef production this year by 140 million pounds on the World Agricultural Supply and Demand report. This is in line with the what the Cattle of Feed report showed. They raised production for the second and third quarters while reducing output for the fourth quarter compared to their March estimates. The increase of grain prices from the report will have a negative impact on price potential.

Hog futures moved much like cattle during the second half of the week by remaining choppy. Cash was under pressure all week with the National Direct Afternoon Hog report down $2.57 on Friday. Pork cutouts gained $0.05 leaving the market in limbo. The potential of the cash market to increase may be limited moving through this week with most retail business done for Easter. USDA reduced their estimates for pork production for the second, third and fourth quarters of this year from their March estimates. They reduced estimated pork production by 240 million pounds for the year.

	BULL SIDE		BEAR SIDE
1)	Cattle futures seem to be building support at the current levels. Technical traders may want to buy back into the market.	1)	Continued higher grain prices will put pressure on feedlots to move cattle as quickly as possible leaving them with less bargaining power.
2)	Stronger boxed beef prices most of last week indicate continued good consumer demand. Packers may need to purchase cattle at steady to higher cash over the coming weeks.	2)	With a shorter trading week and packers already having some cattle forward contracted, business will likely be done at no better than steady prices again.
3)	Hog futures may be building support which will provide confidence to traders to step back into the market more aggressively. Long-term fundamentals have not changed.	3)	Hog futures have not been able to recover from the huge liquidation that had taken place. Futures may have been overdone to the upside and may now be where they should be under the current market environment.
4)	Hog futures have chart gaps significantly higher than current prices that likely will be filled over time.	4)	Traders may be unwilling to buy back into the market unless the cash market finds support. The current supply of hogs is readily available leaving them less aggressive.