Thursday Morning Livestock Market Update - Hog Futures May Continue to Make New Highs

GENERAL COMMENTS:

Try as one might throughout the day, there was nothing to find that was responsible for the substantial increase in cattle futures. It seemed as if traders had digested the bearishness of last week and decided to focus on the fundamentals. Uncertainty still exists, but traders gained the confidence to push prices higher. The strength in boxed beef prices continued on Wednesday, with choice up $0.52 and select up $1.77. Increasing boxed beef prices will require packers to increase the slaughter pace to meet the demand, and they do not have many cattle on hand. Feedlots may hold out for higher cash now that futures contracts have nearly regained the losses of last week. Cash cattle have not yet traded, but the sentiment of the market has turned bullish.

The uptrend in hog futures returned with the July and later contracts making new highs. The July contract moved briefly above $113, but closed slightly below that level. There were no prices released on the National Daily Direct Afternoon report despite a good number of hogs traded. Packers may need to step up to the plate today to purchase the hogs they need as the slaughter pace continues to increase. Hog runs may be tightening, providing support to the market. Pork cutout values increased by $0.12. The weekly average hog weight declined by 0.5 pounds to 290.9.

	BULL SIDE		BEAR SIDE
1)	Continued strength in boxed beef should result in packers increasing slaughter and more aggressive buying in the cash market.	1)	Some live cattle contracts left a gap on the opening on Wednesday. That gap will be filled at some point.
2)	Feedlots may feel more confident to hold for at least steady cash this week now that futures have taken back much of last week's losses.	2)	A strike at the JBS plant in Greeley still looms and could take place at any time. This casts a cloud of uncertainty over the market.
3)	Most hog contracts pushed to new highs on Wednesday, which should keep traders adding to long positions as they trade with the trend.	3)	The weekly average hog weights are 1.8 pounds higher than a year ago at 290.9 pounds.
4)	Weekly hog weights decreased by 0.5 pounds to 290.9 pounds. Active slaughter has been pulling hogs forward.	4)	Packers have purchased a good volume of hogs so far this week. They may not be as aggressive the rest of the week.