Thursday Morning Livestock Market Update - Hog Futures May See Further Gains

GENERAL COMMENTS:

Cattle futures had adjusted to the numbers on the Cattle on Feed report with further movement influenced by what the cash market will do. The packers have not been interested this week with limited bids posted. That should change Thursday as business should surface. Feedlots seem less interested in selling at lower cash, having moved the cattle they needed to over the past few weeks. They may again hold cattle over if they do not receive at least steady money. Boxed beef prices were lower Wednesday with choice down $1.42 and select down $0.89. Feeder cattle futures showed limited weakness but maintained the substantial price spread to live cattle. Potential tariffs on Mexico and Canada have been delayed to April 2.

Hog futures rebounded, posting triple-digit gains. The liquidation pressure subsided with the market correcting from being overdone to the downside. Cutout prices will influence further price direction. Pork cutouts gained $1.01 with bellies posting a gain of $10.30. Packers should be aggressive Thursday as they need to purchase hogs to procure the volume needed for the week. The National Daily Direct Afternoon Hog report showed cash up $1.02 with a weighted average price of $89.86. Weekly hog weights declined to 288.1 pounds, but remain higher than a year ago.

	BULL SIDE		BEAR SIDE
1)	Cattle futures should find support if cash trades steady this week. Traders may become confident the liquidation is over.	1)	Cash cattle have yet to trade this week and steady cash may limit the upside price potential.
2)	Cattle supplies remain tight and that will not change anytime soon. Feeder cattle are in demand and continue to command higher prices.	2)	Packers are receiving sufficient cattle supplies to meet their slaughter needs. This may leave them less aggressive this week and they may not pay higher prices than last week.
3)	Hog prices may have declined sufficiently to stimulate demand. Traders may step into the market aggressively now that the liquidation is finished.	3)	Weekly hog weights remain 0.4 pound higher than a year ago, leaving more pork available for the market.
4)	Weekly hog weights declined by 1.5 pounds to an average of 288.1 pounds.	4)	Hog futures may chop around in a sideways range with traders potentially interested in scalping the market rather than taking a long-term position.