Friday Morning Livestock Market Update - Selling Pressure May Subside in Cattle Futures

GENERAL COMMENTS:

Cattle futures have been struggling over the past two days as weakness increased long liquidation due to the market being overbought. Traders had hoped cash would trade higher again this week, but steady cash developed, and the February live cattle contract went off the board leaving a premium in the April contract. Steady cash should be considered a victory, but lower export sales did not provide support. It may be that higher beef prices are affecting international interest with weekly export sales down 3% from the previous week at 12,200 metric tons (mt). However, domestic demand is holding with boxed beef higher Thursday. Choice increased $1.17 with select gaining $1.24. Feeder cattle futures were the recipients of technical selling again as futures correct from being overbought. Feeder cattle and calves remain in strong demand at auctions.

Hog futures have been impressive over the past three weeks. The June contract has made higher highs in 10 of the past 12 consecutive trading days. Domestic demand optimism is strong, and exports are doing well. Weekly export sales totaled 32,400 mt, which was an increase of 12% from the previous week. The National Daily Direct Afternoon Hog report showed cash up $1.02 with the weighted average reaching $75.49. Cash is expected to be lower Friday with packers likely having sufficient hogs for slaughter. Cutouts were able to close $0.12 higher Thursday, keeping support under the market.

	BULL SIDE		BEAR SIDE
1)	Cattle futures are likely in a technical correction with traders potentially interested in buying the break. The overall fundamentals remain bullish.	1)	Steady cash cattle and the recent selling of futures may move the market into a sideways pattern for a time.
2)	Boxed beef prices are supported as demand continues to hold well. This will support the market.	2)	There are indications packers are purchasing some cattle ahead this week, which may limit their interest next week unless cash is again steady or lower.
3)	June and later month hog futures continue to make new highs as the trend is up and traders continue to trade with the trend.	3)	Hog futures are overbought and ripe for a price correction.
4)	Hog weights declined by 0.3 pounds last week to an average of 287.7 pounds. This is now only 2 pounds above a year ago.	4)	The expectation for lower cash hog trade Friday may result in some profit-taking ahead of the weekend.