Tuesday Morning Livestock Market Update - Follow-Through Strength Likely

GENERAL COMMENTS:

Rather than beginning the week with caution, cattle traders are optimistic about beef prices as the calendar moves into the first day of spring. With the continued strength of boxed beef, traders anticipate higher cash again this week. The exuberance may temper as the end of the week draws near and the Cattle on Feed report comes into focus. The report may not have much impact on the overall market as cattle numbers remain tight, but it will influence trade for a brief time. The estimates are for on-feed numbers on March 1 at 100.8% of last year. Placements are at 106.3% with again a wide range of estimates from 102.7% to 108.8%. Marketed in February is estimated at 103.9% compared to a year ago. Boxed beef provided support on Monday with choice up $1.43 and select up $0.65. Feeder cattle showed the greatest gain of over $3.00 in the May contract.

Hog futures closed higher except for April. June and later contracts continued to make new contract highs. The National Daily Direct Afternoon Hog report showed cash down $0.28, bringing the weighted average price to $79.66. It is likely packers may be more aggressive Tuesday as has been the pattern and they will want to purchase hogs to maintain the strong slaughter pace. Cutouts were down $0.31, which may keep trading activity subdued but futures supported due to the limited decline of both cash and cutouts.

	BULL SIDE		BEAR SIDE
1)	The victory of feedlots receiving higher prices for their cattle last week will have them set their sights higher this week due to the continued strength of boxed beef and good demand.	1)	Cattle futures may trade sideways into the Cattle on Feed report Friday. The April contract already has higher cash factored in.
2)	Live cattle futures are near the previous highs and a break above resistance could trigger further buying interest and higher prices.	2)	Even with the gain Monday, feeder cattle futures remain in a downtrend that has developed over the past three weeks.
3)	Hog futures continue to make new contract highs, keeping the uptrend alive and traders adding to their long positions.	3)	Hog futures remain overbought and could correct if fundamentals turn negative.
4)	Packers are expected to be more aggressive Tuesday as they need to purchase hogs to keep the increased slaughter pace satisfied.	4)	Both cash and cutouts decreasing Monday may result in negative trade Tuesday. Traders may be cautious over further weakness.