Tuesday Morning Livestock Market Update - Hogs May See Further Strength

GENERAL COMMENTS:

Cattle futures opened lower Monday due to the bearish implications of the Cattle on Feed report. However, contacts pushed back into positive territory before falling back again near the level where they opened. Some of the bearishness of the report had already been factored in, which may provide some more aggressive buying interest Tuesday. The February Cold Storage report showed beef in storage was down from January and from a year ago, but the storage report should not have much impact on trading activity Tuesday. Boxed beef prices were slightly higher with choice up $0.17 and select up $0.49. There have not been any cash cattle traded, but trade may take place earlier this week due to Good Friday. Packers may want to wrap up business early.

Hog futures regained much of what was lost during the last-half of last week on Monday. Liquidation seems to have overcorrected the market with traders stepping back to take advantage of the lower prices. Strong cash and cutouts indicated pork prices remain supported. The National Daily Direct Afternoon Hog report showed cash up $1.87, bringing the weighted average price up to $81.17. That was supported by cutouts posting a gain of $2.36 with bellies up $13.18. The packers may remain aggressive in the cash market Tuesday as they want to purchase hogs early. February cold storage of pork supplies was down from the previous month and the previous year. Bellies in storage were slightly higher than in January but below a year ago. The Quarterly Hogs & Pigs report will be released on Thursday.

	BULL SIDE		BEAR SIDE
1)	The fact that cattle did not fall further and did try to rally Monday may indicate the Cattle on Feed numbers are already factored in.	1)	Cattle futures tried to come back from the losses on Monday, but that quickly ran out of steam, allowing futures to fall back. It may be difficult to regain the uptrend.
2)	Traders may be willing to buy this break as the overall fundamentals of the cattle market look supportive.	2)	Cash cattle may trade steady this week, which may keep a lid on upside price potential.
3)	Hog futures have corrected from being overbought and traders have turned buyers again as the market may have been overdone to the downside.	3)	Hog futures rebounded from the recent liquidation but may have a difficult time regaining the losses of last week to resume the uptrend.
4)	Cash hogs continue to remain supported as packers need to maintain an increased slaughter pace and need to bid up to obtain the hogs they need.	4)	Hog futures may move sideways at best for a period as the market may be balanced with supply and demand.