Wednesday Morning Livestock Market Update - Records Are Meant To Be Broken

GENERAL COMMENTS:

Live cattle futures have had an impressive run up but the drama will be one to watch as April futures are in delivery and basis remains negative versus cash trade. It is safe to say that the optimism in the cash market is one of the key drivers to this recent futures rally. June made a new contract high at $252 Tuesday as April made another new all-time high for any live cattle contract at $253.60. April feeder cattle also made new highs, however closed well off those highs by the final bell. Traders are focused on slaughter volume and the cash potential this week. Daily slaughter numbers are trending higher than last week. Choice cutouts were up $1.28 while choice fell $3.84 lower.

Hog futures find another day of trading lower. The June contract is firmly below support after flirting with the line Monday. Daily hog slaughter numbers have had a mixed start to the week, trailing behind last week's daily number, yet trending higher than the same period a year ago. The April contract's final trading day is Wednesday, so not much change or volume is expected there. The National Daily Direct Afternoon Hog report showed a rebound of $1.73 increase with the weighted average price of $90.77. Packers are expected to step up more aggressively today. Pork cutout values decreased by $0.54.

	BULL SIDE		BEAR SIDE
1)	Feeder cattle index has been flying higher, giving good reason for futures to have hope left despite record-setting prices.	1)	Some mixed reports coming out of Joplin, Missouri, from Monday may indicate a wider spread of uncertainty in the market, with feeder cattle bringing anywhere from $25 lower to $12 higher.
2)	Cash targets are expected to rally as we are in a delivery month for live cattle futures with a current negative basis.	2)	Feeder cattle futures climbed to new contract highs yet closed well below the record prices. They seem to be running out of gas.
3)	Slaughter numbers are trending above a year ago so far this week.	3)	The hog market overall has little reason to get excited, with futures breaking below support and cutout values falling as well.
4)	Cash prices are higher on the Daily Direct Afternoon Hog report.	4)	Packers have not needed to be too aggressive with the availability of hogs ready to move to market.