Traders decided cattle futures corrected sufficiently and became active buyers Thursday. The April and June live cattle contracts closed at new contract highs. Traders are bullish for cash this week. There have been no cash trades with a higher bid passed Thursday, similar to last week. Feedlots are holding out and packers need to step up and pay more or go home without any cattle on the books. Boxed beef prices were mixed Thursday with choice down $2.58 and select up $2.91, but that will have little influence on the market Friday. Weekly export sales were low at only 8,000 metric tons (mt). However, this did not influence the market as domestic demand is strong and prices continue to increase. Feeder cattle futures did not exhibit the same strength but followed live cattle higher. The demand in the country remains strong, which could push futures to new highs.
Hog futures showed substantial losses for much of Thursday but rebounded from the lows ahead of the close. Traders positioned themselves ahead of the Hogs and Pigs report. The Quarterly Hogs and Pigs report was surprisingly bullish in all categories. This should provide traders with the confidence to buy into the market aggressively. All hogs and pigs on March 1 were 100% at 74.512 million head. Kept for breeding was 99% at 5.98 million head. Kept for marketing was 100% at 68.532 million head. These were below expectations and should support the market. The National Daily Direct Afternoon Hog report showed cash down $0.10. Cash is expected to be higher Friday as packers need to finish purchases for the week. Pork cutouts were down $0.81. Saturday slaughter is estimated at 66,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | April and June live cattle closed at new contract highs with other contracts not far behind. Traders have regained confidence that the uptrend will resume. |
1) | Traders may not be willing to push cattle futures higher ahead of the weekend with contract highs at resistance level. |
| 2) | Cash cattle are expected to trade higher this week as feedlots intend to get higher prices or hold until next week. |
2) | Boxed beef prices may have difficulty moving much higher as the current prices may begin affecting demand. |
| 3) | The Quarterly Hogs and Pigs report was bullish in all categories. This should trigger aggressive buying interest in futures. |
3) | Even though the Hogs and Pigs report was bullish, sufficient hogs are available to the market. Packers have not had to be aggressive. . |
| 4) | The are chart gaps remaining above the market that may have a chance to be filled over time due to the bullishness of the Hogs and Pigs report. |
4) | Pork cutouts continue to flounder as demand is strong, but not strong enough to establish a higher trend. |
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