Thursday Morning Livestock Market Update - A Day Full of Reports

GENERAL COMMENTS:

After three days of liquidation, the selling ran its course and traders bought back into the market Wednesday. Futures may be overdone to the downside unless cash falls over the next few weeks. Some light cash activity took place Wednesday, which was up to $3.00 lower. It may not have been enough to set the stage for the week, but it does indicate cash will be steady to lower. The bearish Cattle on Feed report and the sharp decline of futures set the stage for lower cash. Boxed beef prices showing weakness also may be a factor even though overall boxed beef prices have increased significantly recently. Boxed beef Wednesday was lower with choice down $2.51 and select down $1.83. Thursday is the final day for trading futures this week with the markets closed Friday.

Hogs tried to push higher, trying to regain the losses of last week, but could not hold the highs. December and later contracts made new highs before falling back to slightly negative levels. Trading activity is expected to be choppy Thursday as traders will position themselves ahead of the Quarterly Hogs & Pigs report. The average trade estimate for all hogs and pigs on March 1 is 100.0% of a year ago, kept for breeding at 97.0%, and kept for marketing at 100.4%. The expectation is for continued reduction in the breeding herd, which would provide ongoing support to the market. Both cash and cutouts did not do well Wednesday. The National Direct Afternoon Hog report showed cash down $1.37 with a weighted average of $79.26 with cutouts declining $1.27. I don't think this will have much impact on the market Thursday as traders look ahead to the report.

	BULL SIDE		BEAR SIDE
1)	Heavy liquidation lasting three days seems to have run its course. The cattle market may be overdone to the downside and may recover some of the loss.	1)	The large decline of cattle futures this week may have a difficult time recovering if cash cattle trade lower this week and maybe next week.
2)	Even with the decline of boxed beef Wednesday, prices remain high due to solid demand. This is not expected to change in the near term.	2)	Much of the attention of traders may be toward the Planting Intentions and Quarterly Grain Stocks report released Thursday and looking ahead to the 3-day weekend. This may limit price movement in cattle futures.
3)	The ongoing decline of the hog breeding herd is expected to provide support to the market as the year continues.	3)	If weekly pork export sales are lower than last week, there could be some pressure put on the market.
4)	There has been an increasing demand for pork, which has kept packers more aggressive and slaughter pace higher.	4)	Any part of the Hogs & Pigs report construed as negative could send futures lower as liquidation might be triggered.