Thursday Morning Livestock Market Update - Futures Remain Lackluster

GENERAL COMMENTS:

The cash cattle trade was sparse Wednesday and not sufficient to indicate a trend for the week. There is some anticipation for higher cash this week, but it may be difficult for more than steady prices to develop. Boxed beef has been mixed the past two days with choice increasing by $0.22 and select down $0.47 Wednesday. The Cattle on Feed report will be released Friday, which may keep the volatility in cattle futures subdued. The estimates are for on-feed numbers on March 1 at 100.8% of last year with trade estimates ranging from 100.1% to 101.3%. Placements are estimated at 106.3% with a wide range of estimates from 102.7% to 108.8%. Marketed in February is estimated at 103.9% compared to a year ago with a range of 102.5% to 104.7%. Feeder cattle futures have been following live cattle rather than leading, which may be the pattern through the end of the week.

Hog futures continued the retracement with a second day of losses Wednesday. The pressure was not due to lower cash as the National Daily Direct Afternoon Hog report showed an increase of $0.46 with the weighted average increasing to $81.24. Slaughter continues to remain strong with the packers needing to be aggressive. Traders seemed focused on the weakness of cutouts, which were down $1.19. Some concern over demand did surface, causing some selling pressure. Futures may now be developing a sideways trading pattern. The weekly export sales report Thursday morning may provide some price direction.

	BULL SIDE		BEAR SIDE
1)	No matter what the Cattle on Feed report shows, cattle numbers will remain tight this year and a negative reaction to the report may be short-lived.	1)	Cattle futures have been stalling for the past two days as traders look ahead to the Cattle on Feed report. More of the same may be in store for Thursday.
2)	Packers may need more cattle this week and might be more aggressive in their purchases. Feedlots are anticipating that and will hold for higher prices.	2)	If cash cattle trade is steady this week, it will be a disappointment to traders and could trigger more selling pressure.
3)	Hog weights declined last week by 0.5 pounds to an average of 287.1 pounds. Weights are now only 0.3 pounds above a year ago.	3)	Hog futures have been correcting from a technically overbought state. Many times, a correction may last for three days.
4)	Cash hogs continue to improve as the packers have remained aggressive with slaughter higher. They need the hogs to keep demand satisfied.	4)	Hog futures may be establishing a sideways trading range, which will limit further upside price potential for a period. This could trigger some long liquidation.