Friday Morning Livestock Market Update - High Cash Cattle Trade is Factored In

GENERAL COMMENTS:

Cattle futures did not show much movement until the final half hour of trading, when strong buying interest pushed prices about $1.00 higher into the close. It is uncertain whether it was short-covering or new buying interest that triggered the gains. Cash cattle did not trade, pushing that off until today. The general feeling is that cash will be steady with last week, but we are never sure unless some activity takes place. Boxed beef prices were lower again, which does not help paint a solid demand picture. Choice boxed beef was down $1.07, with select down $0.34. The choice/select boxed beef price spread is only $1.83, indicating that consumers are looking to satisfy their desire for beef but are looking at less expensive ways to do it.

Only the April hog futures contract closed positive on Thursday, as it is nearing settlement on Wednesday next week. The other contracts were lower as traders have been unable to find solid fundamental support. The National Dairy Direct Afternoon Hog report showed a price change for the first time this week, with a decline of $0.41 on a weighted average price of $90.17. Pork cutouts were up $0.47. There is a good chance packers may be aggressive today, as their hog purchases have been light so far this week. They may step up to finish their purchases with good volume. The chart gap that remained in the August contract from March 27 was filled.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are near contract highs and poised to break above that level, which may result in further short covering.	1)	Feeder cattle have been unable to close the chart gaps above the market. So far, this has been a formidable resistance.
2)	Feeder cattle are near the chart gaps that have remained since Oct. 17. This is a target that will likely be filled shortly.	2)	Cattle futures have higher cash already factored in. Steady or lower cash trade could result in selling ahead of the weekend.
3)	Hog futures are near the lows, which could trigger short-covering and bottom-picking buying interest.	3)	Without much change in fundamentals, hog futures may retest the lows. A move through and close below those lows could trigger liquidation.
4)	Strong hog slaughter is keeping the hog supply current and may eventually lead to tighter supplies as the year progresses.	4)	The April WASDE report showed a projected $2.00 decrease in the quarterly average hog price for the 2nd and 3rd quarters of the year compared to the March WASDE report.