Cattle futures are a sight to behold as new record prices continue to be made. All live cattle contracts closed above $200 on Wednesday as traders anticipate higher cash again this week. Boxed beef prices were mixed with choice up $6.29 and select down $0.55. The strength of boxed beef has been incredible, indicating demand remains strong even at these lofty levels. Feedlots are expected to hold for higher cash this week. Packers may be short-bought as they did not purchase very many for deferred delivery last week. Traders may begin positioning themselves for the Cattle on Feed report to be released Friday. The estimates are for on-feed as of March 1 at 98.2% of a year ago; placements in February at 85.6%; cattle marketed in February at 91.8%.
Hog futures showed another day of weakness Wednesday as traders are not sure whether demand will improve as much as anticipated. It seems consumers prefer beef and high prices have not increased demand for pork. Pork cutouts declined by $0.45 on Wednesday. The National Daily Direct Afternoon Hog report showed strong packer interest with an increase of $2.74 on a large amount of hog purchased. The packers likely have most of the hogs purchased for the week with cash expected to be lower Thursday. Hog slaughter was lighter on Wednesday due to some plants being closed because of weather. Saturday slaughter is estimated at 140,000 but may increase as packers make up for what was lost on Wednesday.
| BULL SIDE | BEAR SIDE | ||
| 1) | All live cattle contracts closed above $200 Wednesday with consistent new highs fueling increased buying interest from traders. |
1) | The Cattle on Feed report may trigger some profit-taking as traders sell some of their long positions just in case the report is negative. |
| 2) | Feedlots will hold for higher cash. The continued support from futures and boxed beef will provide the confidence to hold out. |
2) | Cattle futures are overbought and may run out of continued buying interest at these lofty price levels. |
| 3) | Hog futures are not trending higher but have developed a wide, sideways trading range. Prices may be building support. |
3) | The weekly hog weights increased by 0.2 pounds to an average of 289.8 pounds. This is 2.7 pounds higher than a year ago. |
| 4) | Chart gaps remain quite a bit higher. Gaps are generally filled at some point. The April contract may run out of time but later contracts may close the gaps. |
4) | Pork cutouts have yet to find consistent support. This will continue to limit the upside price potential. |
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