Thursday Morning Livestock Market Update - Hogs and Pigs Report Day

GENERAL COMMENTS:

The strength of boxed beef prices so far this week indicates solid demand continues. Choice cuts increased by $3.11 with select cuts up $2.48. This should result in higher cash cattle trade this week as the feedlots will hold for higher cash due to this strength. Packers will need to be aggressive if they want to pry cattle from the hands of the feedlots. This should result in continued support in cattle futures, with contracts potentially regaining recent losses and pushing back to new highs. Even with the potential for higher futures prices, it is difficult to predict cash trade. However, with strong boxed beef and tight supplies, feedlots may willingly hold cattle over another week if they do not receive the prices they want. Thursday is the last day to trade March feeder cattle.

Hog futures continue to show no solid price direction. Packers continue to purchase hogs without difficulty and without having to bid higher to obtain them. Cash was lower Wednesday with The National Daily Direct Afternoon Hog report down $0.46. Cutouts fell, posting a loss of $1.90 with the largest declines in hams and bellies. It is difficult to say whether cash will trade higher Thursday, as it does many times, due to a large number of hogs already purchased this week. The Quarterly Hogs and Pigs report will be released Thursday. The average estimate for all hogs and pigs on March 1 is 101.2% of a year ago. Kept for breeding is estimated at 100.2%. Kept for marketing is estimated at 101.1%. Saturday slaughter is estimated at 66,000 head.

	BULL SIDE		BEAR SIDE
1)	Boxed beef prices have been very strong this week, indicating consumer demand remains solid. Packers may need to step up and pay more to maintain the slaughter pace.	1)	It is uncertain whether packers are short-bought or if they have sufficient cattle on hand to leave them less aggressive in the cash market.
2)	Feedlots will hold out for higher cash due to demand strength and more aggressive buying in cattle futures.	2)	Even though live cattle futures hold a discount to cash, the price did not recover much of the recent weakness.
3)	Hog futures have been holding support. There is potential for pork demand to improve over time as beef becomes too expensive for consumers.	3)	Weekly weights gained 0.9 pounds last week to an average of 290.7 pounds. This is 3.3 pounds higher than a year ago.
4)	A friendly Hogs and Pigs report could support the market and turn the trend higher.	4)	Hog futures have been unable to break above technical resistance. Short-term traders have been able to take advantage of the sideways trend.