Friday Morning Livestock Market Update - Futures May Bounce Into Weekend

GENERAL COMMENTS:

Cattle futures have struggled all week with June live cattle futures closing at the lowest level since Oct. 6, 2021. The anticipation of higher beef prices due to strong demand and lower cattle supplies ran out of steam in February. Liquidation of cattle due to the ongoing drought did not impact supplies as much as anticipated according to the Cattle on Feed reports. Inflation heated up as well with fears of demand slowing further. June cattle hold a large discount to cash with the market showing no sign of reducing that discount at the present time. Steady cash should be viewed as a victory this week, but there is already concern whether that can be repeated next week. Boxed beef prices were higher with choice up $2.12 and select up $2.18. USDA raised beef production for the year and raised the average beef price on the WASDE report, but that had little impact on trading.

Not much can be said about hogs that has not already been said. The projection of the head and shoulders top has been achieved and still could not garner any strong buying interest. China being a buyer of pork on the weekly export sales report did not provide any support. Export sales totaled 26,300 metric tons (mt), up 10% from the previous week. Cutouts were down $0.89. The National Direct Afternoon Hog report showed cash down $1.93. The WASDE report showed a slight reduction in pork output along with a reduction in average quarterly prices the rest of the year. There may be some short-covering Friday ahead of the weekend. Saturday slaughter is projected at 50,000 head.

	BULL SIDE		BEAR SIDE
1)	It is Friday and cattle futures are near technical support, which may cause some short-covering into the weekend.	1)	There is concern cash may decline next week as packers continue to purchase cattle for immediate as well as deferred needs.
2)	Improving pasture conditions may relieve some of the pressure to move cattle, providing some bargaining power for better prices in the near term.	2)	Feeder cattle for August and later closed at new contract lows Thursday. The gains realized through mid-February have been completely eliminated.
3)	Hog futures are oversold, which may trigger a bounce and a price retracement.	3)	Hog weights are higher than a year ago, which is putting more pork on the market with the brisk slaughter pace.
4)	Futures see a chart gap above the current level that will be filled at some point. The head and shoulders price projection has been achieved, which may bring buyers back into the market.	4)	Cutouts remain unable to find support at a time when demand should be higher.