Thursday Morning Livestock Market Update - Weekly Export Sales, WASDE Reports to Influence Trade

GENERAL COMMENTS:

Cattle traders will watch three items Thursday. The weekly export sales report will indicate international demand. The WASDE report will influence grain prices and it will also show USDA's estimates for beef production and inventory. The most important item will be cash trade. Futures already have a price increase factored in, but higher cash may provide further support to the market, keeping the uptrend intact. Offers have not yet been posted in the North with offers at $182 or higher in the South. Boxed beef was higher with choice up $0.91 and select up $0.82. Feeder cattle moved to a higher high before slipping back, keeping the uptrend alive and well. Feeder cattle continue to command higher prices at auctions as cattle feeders are optimistic about cattle prices throughout the year.

Hogs were higher much of Wednesday, but succumbed to selling pressure into the close. Futures closed mixed, which was a good sign, but the higher prices were left behind. Traders are facing a choice Thursday as cash was higher while cutouts fell. The National Daily Direct Afternoon Hog report showed cash up $0.92. However, cutouts fell $2.24 with bellies down $7.33. Packers may need more hogs, which could make them aggressive in the cash market Thursday, but the decline of cutouts may temper some of their aggressiveness. Weekly export sales may be strong as the strength of cash can indicate strong international demand. The WASDE report Thursday will provide estimates for pork production, inventory, and prices.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are just shy of closing the chart gaps that have remained for a few months. This will be a target for technical traders.	1)	Cattle futures have higher cash already factored in. Futures will not need to increase and may correct if cash is no better than steady.
2)	Stronger cash is expected this week, which will provide good support to the market and keep the uptrend intact.	2)	So far, futures have been unable to close the chart gaps. Traders are willing to sell at those levels for the time being.
3)	Higher cash hags over the past two days indicate strong demand and the need for packers to purchase hogs. They still need to purchase more to meet their needs for the week.	3)	The inability of hog futures to hold the strong gains on Wednesday could trigger further liquidation.
4)	Hog futures have corrected from being overbought and may now uncover more buying interest from traders on this break.	4)	Lower cutouts over the past two days may hurt both cash trade and the futures market as demand may not be as good as hoped.