Although the desire from both packers and feedlot managers would be to finish cash cattle trade early and call it good ahead of the long holiday weekend, it appears that there is still a lot of work to do before any significant business gets done. The few trades reported through the North so far this week have been incredibly inconsistent when it comes to price ranges and are unable to establish a market trend at this point. Packer interest is expected to improve through the morning, but it could be late day before trade develops. Futures trade is expected to be mixed following the late-day market pullback on Thursday. Overall trade volume is likely to be extremely light with many traders already stepping away from the complex in front of the long holiday weekend.
Initial cash market activity is expected to remain mixed in a narrow range early Friday morning. Bids are expected to develop from 50 cents lower to 50 cents higher with most bids likely to remain steady to weak. The overall lack of market activity at the end of the end of the week may be the biggest factor through the entire complex, with traders focusing on the ability to square positions following the market support over the last few days. With some traders already stepping out of the market and preparing for weekend activities, the overall direction of futures trade is likely to be unsettled. The light volume may bring additional volatility to the complex as traders look for increased overall positioning opportunities. Following the Friday session, markets will remain closed until Tuesday due to the Memorial Day holiday.
| BULL SIDE | BEAR SIDE | ||
| 1) | The focus on increased overall summer grilling demand as traders move into the Memorial Day Holiday weekend could help to draw underlying activity through the complex. This may bring a combination of commercial and investment traders back to the table through the last week in May. | 1) | Strong market pressure Thursday is creating some market uncertainty through the complex. This may lead to follow-through pressure as traders quickly adjust market positions through the end of the week. |
| 2) |
Feedlot managers continue to hold onto asking prices from earlier in the week. This is creating the expectation that they feel packers will be able and willing to step back into the complex with firmer bids through the end of the week if they wait long enough.
| 2) | Beef values have been inconsistent through the end of the week with limited overall support developing even though expectations of firm holiday and early summer demand remain good. This could add increased pressure to the entire complex as traders look for some movement through the complex. |
| 3) | The ability to draw buyers back into the complex late in the day Thursday was a huge momentum boost through the entire lean hog futures complex. Although the overall market remains in the lower half of the trading range, the rally through the week is helping to rebuild market momentum. | 3) | Sharp losses in rib primal cuts Thursday has created some underlying concern about the ability to continue to push pork values higher in the near future. Rib prices fell over $20 per cwt in the one-day market tumble. This could create some additional underlying concern through the end of the week due in part to the limited market activity. |
| 4) | Firm cash hog values are expected to close out the week with packers gaining access of limited needs ahead of the holiday weekend. The fact that prices have not dipped due to the current list of hogs that are ready for market continues to focus on strong underlying expected demand. | 4) | Even though lean hog futures have bounced higher through the recent trading sessions, the complex remains in the bottom half of the short-term trading range. This continues to add to concerns that increased market pressure is likely to develop over the coming days and weeks, which could cause some additional technical pressure through the entire lean hog complex. |
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