Thursday Morning Livestock Market Update - Hogs May See Some Follow Through

GENERAL COMMENTS:

Both live and feeder cattle struggled for a while Wednesday but found some support from lower corn prices and the ongoing bullish attitude of traders. There had been some disbelief over the action of the cash market last week. Tightening cattle numbers should continue to support prices unless consumer demand begins to slow. There was some light cash trading activity Wednesday, but not enough to establish any solid levels for the week. Kansas and Texas had a few hundred head traded at $171 to $172 with dressed in Nebraska and Iowa from $281 to $285. Cash activity should increase Thursday as packers will step up to the plate to get cattle on the books. Boxed beef Wednesday was higher with choice up $1.61 and select up $0.32. Feeder cattle remain in demand with auctions continuing to show higher prices. Thursday is the last day to trade April feeder cattle. Weekly export sales will be released Thursday morning, but likely will not have much influence on the market.

Hog futures finally found some footing, at least for Wednesday. June futures have increased $5.20 since last Thursday, April 20. It has been quite some time since we have seen that amount of gain over a short period. The question is whether the movement has been enough to cause further short-covering by the funds that have been holding a large short position. The strength Wednesday was triggered by the aggressive buying of packers in the country with the National Direst Afternoon Hog report showing cash increasing $2.51. It has been a long time since cash has shown that large of an increase. It will be interesting to see if packers remain aggressive Thursday. The usual is that cash prices are weaker on Thursday. Pork cutouts were down slightly with a loss of $0.04. Weekly export sales will be released and will hopefully show strong sales.

	BULL SIDE		BEAR SIDE
1)	Cattle turned higher Wednesday as corn prices weakened and traders remained bullish on the market.	1)	There is potential for cash cattle to trade steady to slightly lower again this week.
2)	Boxed beef prices continue to remain strong, indicating demand continues to hold.	2)	April cattle finish trading Friday and will leave a chart gap below the market. June has two gaps below the market that have a strong chance of being filled.
3)	Hog futures may have moved sufficiently higher, possibly triggering further short-covering by the funds. This could push futures higher Thursday.	3)	Funds may step back up in hog futures and sell the rally as they have been doing for numerous weeks.
4)	Packers needed hogs Wednesday and were willing to pay up for them. Maybe supplies are beginning to tighten slightly.	4)	Packers may not be as aggressive in the cash market the rest of the week, which may limit upside price potential.