Tuesday Morning Livestock Market Update - Cash May Be Slow to Develop

GENERAL COMMENTS:

Traders will be looking forward to see how much demand may have unfolded over the holiday weekend. Orders from retail will provide an indication as to product movement as the grilling season kicked off. There is anticipation that cash cattle may be steady to lower again this week as packers have cattle contracted ahead and may see willing feedlots looking to move market-ready cattle this week. Let's face it, feed prices are not getting any cheaper with too much at stake this growing season. Higher numbers of cattle are expected to be available to the market over the next weeks, leaving the market struggling to find sold support. Boxed beef prices were higher with choice up $1.45 and select up $2.07.

Traders may be a little more optimistic for hogs as overall demand seems to be improving. Cash was $1.67 lower on the National Direct Afternoon report on Friday as the week wound down and most business was done. Retail is expected to place larger orders as the weekend likely moved quite a bit of pork. Packers may be moving aggressively early in the holiday-shortened week to make sure they have sufficient hogs to process to meet demand. Cutouts also faltered Friday with a decline of $1.97. It will be important for cutouts to find support and trend higher, or futures may stall. It will also be important for cutouts to trend higher for June to reach the technical objective of the head-and-shoulders bottom over the next two weeks.

	BULL SIDE		BEAR SIDE
1)	Lower cattle weights and good product movement would cause packers to be more aggressive to make sure they obtain sufficient numbers for the week as well as continue to purchase ahead.	1)	Cash cattle are expected to be no better than steady this week with a strong potential for lower cash.
2)	June live cattle futures hold a significant discount to cash. If cash stabilizes, futures will adjust higher.	2)	Packers may not be aggressive this week as they know feedlots will have cattle to move and they already have some contracted ahead.
3)	July and later hog contracts made new highs Friday, keeping the higher trend intact. Lower cash and cutouts had limited impact.	3)	Cash hogs will need to improve, or the June hog contract may flounder over the next two weeks as it remains close to cash.
4)	Technically, the June hog contract will move higher if it is to reach the objective of over $115 for the head & shoulders bottom over the next two weeks. Cutouts will need to be supportive.	4)	Both June and July hog contracts have chart gaps substantially below the current market.