Thursday Morning Livestock Market Update - Traders May Take a Wait-and-See Attitude

GENERAL COMMENTS:

Live cattle futures showed limited volatility. Futures managed to post minor gains into the close. Traders seem to have moved into a wait-and-see attitude as cash cattle have not traded, and the Cattle on Feed report will be released Friday after the close. Generally, cash cattle are not traded until late on Friday when the report is released. This may result in subdued trading volatility today. The general feeling is for cash cattle to trade steady this week. Boxed beef prices closed lower after a steady increase for many days. Choice boxed beef declined $1.56 and select declined $0.55. The average trade estimates for the Cattle on Feed report are on-feed numbers as of March 1 at 99.3%, placements in February at 100.3%, and marketings at 92.4%. There is a wide range of estimates for placements. The range of estimates is from 96.3% to 105.0%. Analysts are trying to determine the impact on placements due to the Mexico border remaining closed and the increase in feeder cattle sales during February.

Hog traders saw little to influence the market one way or the other. Futures closed mixed but held most of Tuesday's gains. Cash was higher on the National Daily Direct Afternoon Hog report with a gain of $1.11. It is expected that packers may have purchased most of their needs for the week, so they may not be as aggressive today. Pork cutouts declined $1.07, with most of the pressure from a $3.65 decline in hams and a $2.09 decline in bellies. Hog futures may be building a base of support with limited reason for the market to see further liquidation.

	BULL SIDE		BEAR SIDE
1)	If the cash cattle trade is no worse than steady this week, futures may trade higher to remain in line with cash.	1)	The weakness of boxed beef on Wednesday may signal that buyers have reached a threshold as retail demand may slow somewhat.
2)	No matter what the Cattle on Feed report shows, cattle numbers remain tight, which should be supportive to the market.	2)	Lower cash trade remains a possibility as slaughter remains reduced and more cattle may be available.
3)	Hog futures may be building support, which may provide traders with the confidence to add to their long positions.	3)	Packers may have most of their hog needs for the week, which may leave them less aggressive in the cash market.
4)	Packers have increased slaughter consistently as demand has improved. Weekly hog weights declined 0.2 pounds to average 291.0.	4)	Hog futures may move in a sideways pattern at best for the near term. If futures are unable to move trend higher, further liquidation may be possible.