Thursday Morning Livestock Market Update - Moderate Gains Anticipated

GENERAL COMMENTS:

Cattle took a little while for traders to become more confident to buy back into the market. Both live cattle and feeder cattle were lower for a time before the selling pressure subsided and futures were able to move higher. Technically, the price action Wednesday was not very supportive with futures posting lower lows and lower highs. Cash cattle look to remain steady for the week as packers are getting the cattle they need. Cutouts were lower yesterday with choice down $0.49 and select down $1.85. With corn futures under slight pressure overnight, there is a good chance cattle futures will again be higher. Futures are carrying a discount to cash when generally they would carry a premium at this time of year. Weekly export sales will be important for price direction Thursday.

Hogs did not look very positive for much of the day with futures trading on both sides of unchanged. Thankfully, the market was able to close higher. Liquidation that has gripped the market over the past week may have run its course. The technical influence of the key reversal of last week and the island top in June triggered the selling. Packers have not had to be aggressive this week as market hogs seemed readily available. Cutouts were able to post a gain of $0.77, which could provide some support the market. Strong weekly export sales will be important to provide confidence for traders to buy back into the market. Saturday slaughter is estimated at 89,000 head.

	BULL SIDE		BEAR SIDE
1)	Corn prices are slightly lower overnight which could provide some support to futures Thursday.	1)	Cattle futures made a lower low and a lower high Wednesday which does not indicate technical support has been found.
2)	Both April and May feeder cattle contracts have chart gaps above current prices that need to be filled.	2)	The inability of cash cattle to trade higher does not bode well for the market during the time of year. Futures carry a discount to cash.
3)	Hog futures closing higher Wednesday may indicate the liquidation phase may be finished. Traders may buy back into the market to positions themselves for the long haul.	3)	Traders may not be too anxious about stepping back into the market anytime soon. Cash will need to prove itself before traders may become more aggressive.
4)	Fundamentals have not change in the hog market. Supplies are expected to continue to tighten as the year progresses.	4)	The strong uptrend is no longer intact. Hog futures could retest the lows of early March.