Thursday Morning Livestock Market Update - Futures May Find Some Stability

GENERAL COMMENTS:

Cash cattle traded mostly steady Wednesday, which was not a surprise. The surprise was that cattle could not find any support even though corn futures fell significantly. Live cattle futures broke recent technical support while feeder cattle made new contract lows. It may be tough to find traders willing to buy into the market aggressively over the course of the next few weeks as there are quite a few cattle expected to be available to the market. This, along with the upcoming Cattle on Feed report to be released Friday, may leave the market floundering. However, if the weakness remains into the report, we could see a rebound in prices no matter what the report says as it may be overdone to the downside. Estimates for the report are for on feed at 101.4%, placements at 96.1% and marketings at 98%. Boxed beef prices were lower with choice down $0.01 and select down $2.17.

Hog futures struggled early but found support after both cash and cutouts showed strength. The large decline after the opening bell took some time to overcome with contracts eventually moving to positive territory. The National Direct Afternoon report showed cash up $0.31. Cutouts were able to gain $1.50 and the fourth consecutive day of gains. Weekly export sales may have some influence on the market, but the focus may be more on whether there can be another strong day of cutouts. Saturday slaughter is estimated at 58,000 head.

	BULL SIDE		BEAR SIDE
1)	Futures may stabilize ahead of the Cattle on Feed report, keeping the market from exhibiting further weakness.	1)	Cattle futures are unable to find support from either cash or lower corn prices. Demand has slowed as inflation is impacting consumer buying.
2)	Feeder cattle should find support from yet another day of lower corn prices.	2)	Packers continue to purchase cattle ahead of time, providing them the ability to be less aggressive in the cash market. Feedlots have cattle that need to be moved.
3)	Support for pork cutouts may be established with strength seen over the past four days. With Memorial Day coming and the grilling season, pork might see increased demand.	3)	Hog futures are nearing price resistance that could stall the recent rally. Both June and July have a chart gap remaining under the market.
4)	Hog weights are declining with weights down 2 1/2 pounds this week averaging 286.4 pounds.	4)	Packers may be done buying for the week with lower cash possible as they do not need to be as aggressive to fill slaughter needs.