Friday Morning Livestock Market Update - Cash Trade to Set Direction

GENERAL COMMENTS:

There has been very limited cash trade of cattle in the North at a steady price with last week. Maybe not enough to indicate the trend for this week, but maybe it is. Many times, what initially trades is generally what trades for the week. However, with packers seemingly short-bought, there is anticipation they will need to be more aggressive. It may be up to feedlots if they are willing to hold for higher cash with the possibility of holding cattle over another week or whether steady cash will be sufficient. Grains were higher overnight with the news of Ukraine attacking a Russian Black Sea naval base. Weekly export sales totaled 12,400 metric tons (mt), down 42% from the previous week. Boxed beef prices were mixed with choice down $1.17 and select up $0.84.

Hog futures took it on the chin, likely on cash weakness due to low weekly export sales. The National Direct Afternoon Hog report showed cash down $1.32, bringing the weighted average down to $100.55. Weekly export sales totaled 17,800 mt, down 30% from the previous week. Cutouts were up sharply, posting a gain of $4.00. Bellies were up $22.31. Traders will need to decide whether they will trade cash weakness or strong cutouts Friday. Generally, they focus on cutouts the following day, but the potential for lower cash and technical weakness may override cutout strength.

	BULL SIDE		BEAR SIDE
1)	Packers will need to step up to the plate Friday or risk being extremely light on cattle supplies. That may mean paying more for cattle.	1)	Some light cash cattle traded Thursday at steady money with last week. That may be the indicator of cash for the week.
2)	Live cattle futures moved above the consolidation range of last week, providing confidence to technical traders that support will hold.	2)	Higher corn futures overnight might put pressure back onto the cattle complex Friday.
3)	Strong pork cutouts Thursday should have a positive influence on futures Friday.	3)	The uptrend momentum of pork prices may have changed as higher prices may have reduced international demand.
4)	August hog futures left a chart gap above the market on the open Thursday which may be filled before the contract goes off the board in a little over a week.	4)	Packers seem to have purchased sufficient hogs for the week with lower cash possible again Friday.