Friday Morning Livestock Market Update - Southern Cash Cattle Expected to Trade Higher

GENERAL COMMENTS:

Cattle futures received a boost once Northern cattle began trading $2 higher Thursday . Live sales took place at $185 to $187 with dressed sales at $292. Traders were waiting for cash trade to provide direction. This triggered more aggressive buying interest, pushing live cattle futures to the top end of the trading range. Southern trade has yet to take place and is expected to be steady to higher, which should provide support for the market. Boxed beef prices were higher with choice up $1.70 and select up $1.17. Feeder cattle futures turned higher on the support from live cattle. Fund traders are defending their long positions on the idea prices will increase on continued higher cash prices and tighter supplies.

April hogs logged four consecutive days of weakness as spread trading remained active. This may unwind Friday ahead of the weekend due to the continued strength of cash. Later contracts were able to hold in positive territory throughout the day. The National Direct Afternoon Hog report showed a gain of $0.95 moving the weighted average price to $77.17. The packers have remained aggressive so far this week but may have their needs covered, which may result in lower cash Friday. Cutouts showed weakness with values down $0.34. Weekly export sales were good at 36,400 metric tons (mt), up 12% from the previous week. Saturday slaughter is estimated to be 100,000 head.

	BULL SIDE		BEAR SIDE
1)	Higher cash trade may provide sufficient support to push cattle futures above resistance and the trading range.	1)	Higher cash cattle trade may already be factored into the market, keeping upside potential limited Friday.
2)	The chart gap on the April live cattle contract has yet to be filled. A stronger cash trade this week may provide sufficient support to get it done.	2)	Traders may be more focused on the WASDE report now that they have an idea of what cash will do Friday.
3)	Higher cash hog prices this week continue to provide support under the market.	3)	The packers are expected to be mostly finished buying hogs for the week. It will be up to cutout prices to provide support.
4)	Reduced hog slaughters a few days this week are not due to packers trying to back up hogs. They are the result of some plants having mechanical issues. Pork demand is holding well.	4)	Hog futures remain overbought technically, which may result in a price retracement soon.