Monday Morning Livestock Market Update - Hog Futures May See Follow-Through Strength

GENERAL COMMENTS:

Cash cattle traded steady for the week, which was enough to generate buying interest in futures. There had been a discount to cash, and that allowed room for futures to move higher. Slaughter increased from the previous week, running about 520,000 head. This is a good sign due to the Greeley plant remaining on strike. Slaughter is continuing despite the disruption. Slaughter and carcass weights will remain a big topic moving forward. The reduction in slaughter and record-large carcass weights have been favorable for packers. Cash business is expected to take place earlier this week due to the holiday-shortened trading week due to Good Friday. Boxed beef prices were mixed, with choice up $3.12 and select down $1.79. The Commitment of Traders report showed fund traders increasing their long live cattle position by 4,450 futures contracts to a net long of 107,593. They added 188 contracts to feeder cattle, increasing their net-long position to 19,562.

Hog futures gapped higher on the open on Friday, leaving a gap below the market. Traders digested the Hog and Pigs report and gained the confidence to buy aggressively, with the July and August contracts posting the greatest gains. Packers remained unaggressive to close out the week, as cash on the National Daily Direct Afternoon Hog report was down $0.37. However, pork cutouts were up $1.21. Traders will need to see greater consistency in both cash and cutouts to regain the losses of the past few weeks. Hog slaughter remains strong and above a year ago. Packers had not been aggressive the last half of the week, but should pay up for hogs today as they will attempt to accomplish business early due to the holiday-shortened week. The Commitment of Traders report showed fund traders were net sellers of 15,966 hog futures positions, reducing their long positions to 93,770 contracts.

	BULL SIDE		BEAR SIDE
1)	The strong rebound in cattle futures on Friday may see follow-through strength today.	1)	Cattle futures adjusted higher to move in line with cash, but no other specific reason triggered the strong rally.
2)	Cattle slaughter increased last week despite the continued strike at the JBS Greeley plant. Slaughter has been shifted to other plants.	2)	High cattle weights and reduced slaughter are providing leverage to packers. Cash is expected to be steady at best this week.
3)	Hogs closed higher as traders felt confident to buy into an oversold market and overdone to the downside.	3)	Hog futures left a chart gap on the open Friday that will be filled at some point. Weakness is needed to accomplish the task.
4)	Continued strong slaughter keeps the market current and may eventually tighten supplies and reduce runs.	4)	Traders will need to see consistent strength in cash and cutouts to regain the losses of the past few weeks.