Friday Morning Livestock Market Update - Traders Cautious Ahead of Report

GENERAL COMMENTS:

Front-month live cattle and feeder cattle received a little boost Thursday as cash cattle trade began to surface. Cash trading $2 to $4 higher should see further support in Friday's trading, but that support may be confined to April live cattle as later contracts may remain choppy ahead of the Cattle on Feed report to be released Friday afternoon. The past few reports have seen some surprising numbers in the placement category, but the impact it has had on the market has been short-lived. Nevertheless, traders may remain cautious ahead of the report. The estimates are for on-feed numbers on March 1 at 100.8% of last year with trade estimates ranging from 100.1% - 101.3%. Placements are estimated at 106.3% with a wide range of estimates from 102.7% - 108.8%. Marketed in February is estimated at 103.9% compared to a year ago with a range of 102.5% - 104.7%. Boxed beef was higher with choice up $0.29 and select up $1.02. Weekly export sales were not good at only 11,000 mt and a marketing year low.

Hog futures received some support from weekly export sales of 33,800 mt but that support was not sufficient to keep futures higher. The market correction has taken place over three days. This may run its course supported by some positioning ahead of the weekend. The June contract closed at the lowest level in a month, relieving the overbought status of futures. The packers were not as active in the cash market on Thursday with the National Daily Direct Afternoon Hog report showing a decrease of $0.94 with the weighted average declining to $80.30. Cutouts also suffered a little with the price down $0.10. It does not appear that demand has declined very much, but the market seems to be finding a balance between cash and futures. Saturday slaughter is estimated at 90,000 head.

	BULL SIDE		BEAR SIDE
1)	Higher cash cattle again this week should provide overall support to futures. Packers need cattle to satisfy continued strong demand.	1)	If the Cattle on Feed report has a bearish category, further selling may erupt on Monday as traders react to the numbers.
2)	A friendly Cattle on Feed report could support the market and continue the uptrend in prices.	2)	Reduced slaughter numbers and higher boxed beef prices may impact overall demand as higher beef prices reach consumer resistance.
3)	Hog futures have had 3 days of price correction. This should run its course as the market has corrected the overbought technical status.	3)	Pork cutouts continue to have some difficulty finding solid support with prices remaining widely variable.
4)	Overall pork demand remains good. Cash is the highest it has been in a long time and hog slaughter remains strong.	4)	Packers may be finished buying hogs for the week resulting in lower cash again Friday.